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TMI Blog2007 (6) TMI 164X X X X Extracts X X X X X X X X Extracts X X X X ..... urt was delivered by P. P. S. JANARTHANA RAJA J.— These appeals are filed under section 260A of the Income-tax Act, 1961, by the Revenue, against the order of the Income-tax Appellate Tribunal, Madras Bench "B", Chennai in I. T. A. Nos. 2043 and 2044(Mds)/96 dated February 24, 2002, raising the following substantial questions of law "1. Whether, on the facts and circumstances of the case, the Tribunal was right in holding that the switch over from valuation as per market price to cost price was correct, being a substitution of one method by another scientific method? 2. Whether, on the facts and circumstances of the case, the Tribunal was right in holding that the assessee was right in changing over the method of valuation, when it d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ases in favour of the assessee and held that, the valuation of the shares held as stock-in-trade by the assessee correct. Aggrieved, the Revenue filed appeals to the Income-tax Appellate Tribunal ("the Tribunal"in short). The Tribunal dismissed the appeals and confirmed the orders of the Commissioner of Income-tax (Appeals). Hence the Revenue preferred the present tax cases. 4 Learned standing counsel appearing for the Revenue submitted that the Tribunal erred in approving the irregular adoption of change in method of valuation of shares held as stock-in-trade from market price to cost price. It is also submitted that the change in valuation does not result in the determination of the true profits for tax purpose and the same is arbitra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee and therefore there is no meaning in saying that the method of valuation followed for that year was the method which was being hitherto adopted by the assessee. Such a valuation had been adopted for a solitary year. The reason for the change had also been satisfactorily explained by the assessee. Due to wide range of fluctuation in the share price during February 1992 to June 1992, the value of shares held as stock as on March 31, 1992, would have been artificially boosted and abnormally high if it had been valued at market price; it would not have reflected the correct position. It was because of this that the appellant switched over to valuation at cost price which was more realistic. Incidentally, the learned representatives al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... change effected should not be casual, for temporary gain, or for temporary purposes restricted to one year. The court also held that there was no merit in the argument that in the event of a change in the method of valuation, the opening stock should have also been suitably revalued. The value of opening stock cannot be disturbed merely because the closing stock is valued on a different method. The value of opening stock for this year has to be necessarily the value of closing stock for the earlier year. It is true that in the year of change of method of valuation of closing stock there is bound to be some anomaly; but that will get absorbed in course of time as the new method is going to be applied on a permanent basis thereafter. In the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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