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TMI Blog2016 (7) TMI 376X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee. We place reliance on the decision of the Hon’ble Supreme Court in the case of Chainrup Sampat Ram vs CIT reported in (1953 (10) TMI 2 - SUPREME Court ) in support of this proposition. We find that the assessee has been consistently following LIFO method of accounting for valuation of its closing stock of gold which has been accepted by the department in the earlier years even in scrutiny assessment proceedings of the assessee. Then there is no justifiable reason to reject the same method during the year under appeal. - Decided against revenue - I.T.A No.2085/Kol/2013 - - - Dated:- 1-6-2016 - Shri N. V. Vasudevan, JM Shri M. Balaganesh, AM For The For Appellant: Shri Alok Kr. Nag, JCIT, Sr. DR For The Respondent : Shri S. M. Surana, Advocate and Shri sunil Surana, FCA ORDER Per Shri Balaganesh, AM: This appeal by revenue is arising out of order of CIT(A)-XXX, Kolkata vide Appeal No. 252/CIT(A)-XXX/R-43/20-11-12 dated 08.02.2013. Assessment was framed by Addl. CIT, Range-43, Kolkata u/s. 143(3) of the Income tax Act, 1961 (hereinafter referred to as the Act ) for AY 2009-10 vide his order dated 27.12.2011. 2. The only issue to be dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ₹ 6,25,31,074 Add: Gold valuation ₹ 6,27,24,374 Total Value of Stock Rs. 12,52,55,448 Stock of Packing Materials ₹ 43,610 Total Gold Stock in terms of Pure Gold 96439.320 grams Less: Gold Deposit 22686.660 grams Net Gold Stock in terms of Pure Gold 73752.660 grams Weight Rate Amount (Rs) Value of Closing Stock of Gold As on 31.3.2007 69099.880 686.850 4,74,60,914 Value of Balance Stock of Gold As on 31.3.2008 4652.780 1005.590 46,78,789.04 Total Value of Gold 73752.660 5,21,39,703.04 Add: Value Addition 1,05,84,671.50 Total Value including Value Addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the addition was made by the Learned AO on account of revaluation of closing stock by discarding the LIFO method regularly followed by the assessee and by adopting average cost arrived at by taking the average cost of purchase for the Gold purchased during the year. The assessee argued that by adopting LIFO method , it had disclosed closing stock of ₹ 12,52,99,059/- which included closing stock of ₹ 43,610/- of packing material , ₹ 5,21,39,703/- of Gold and ₹ 6,25,31,074/- on account of Stone. The Learned AO had not disputed the closing stock value of the stone and packing materials though he had doubly added the value of packing materials while determining the closing stock. The Learned AO had adopted the value of Gold at ₹ 9,50,24,391/- as against the value of ₹ 5,21,39,703/- taken by the assessee. It was argued that the Learned AO had not disputed the value of addition of the making charges embedded in the ornaments which was ₹ 1,05,84,671/-. It was argued that the assessee has been consistently following LIFO method for valuation of closing stock since the inception of the business and such system was consistently followed and accep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been accepted in all the earlier years. Reliance was also placed on the decision of Cuttack Tribunal in the case of Dwarka Jewellers vs ITO in ITA No. 03/CTK/2009 dated 23.7.2010 and Chandigarh Tribunal in the case of DCIT vs Vipin Aggarwal in ITA No. 450/Chd/2010 dated 23.7.2010 in support of its arguments. 5. The Learned CITA held that the Learned AO after detailed analysis had held that the appropriate method of value of gold is LIFO method which has been specifically mentioned by him in para 19 of the assessment order. The Learned AO had confused himself by first accepting the LIFO method but valuing the stock at purchase price of the current year worked out by him at ₹ 1288.41986 per gram which is the average rate of purchase taken by him in respect of the purchases made during the current year of 50324.670 grams for ₹ 6,48,39,304.12. Therefore he held that the Learned AO had totally contradicted himself in the assessment order by taking the value of closing stock at the current rate, whereas he had earlier held that the appropriate method for valuation of gold would be LIFO method. The Learned CITA on going through the workings of valuation of closing stock ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns and perused the materials available on record. The facts elaborately stated in the arguments advanced by the assessee remain undisputed and hence the same are not reproduced herein for the sake of brevity. The only dispute is with regard to valuation of closing stock of gold. It is not in dispute that the assessee has been following consistently LIFO method for valuation of closing stock of gold. It is not in dispute that the same has been consistently accepted by the revenue in the earlier years even in the scrutiny assessment proceedings. It is elementary that the regular system of accounting followed by the assessee could be disturbed only in the event of finding out defects in the books of accounts and stock registers maintained by the assessee. Admittedly, no defects were noticed or pointed out by the Learned AO in the books of accounts and stock registers etc furnished before him at the time of assessment proceedings. Infact no discrepancy was noticed on the quantity of gold and other jewellery by the Learned AO. We find that the Learned AO had not recorded any clear finding in his order that the LIFO method of accounting followed by the assessee for valuing its closing st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 56879.620 637.29 36248825 Value of Balance stock 12220.260 917.50 11212089 69099.880 47460914 For 31.3.2008 Grams Rate Value Value of closing stock of FY 2006-07 69099.880 686.85 47460914 Value of Balance stock 6389.830 1005.59 6425549.15 75489.710 53886463.15 For 31.3.2009 Grams Rate Value Value of closing stock of FY 2006-07 69099.880 686.85 47460914 Value of Balance stock rate of FY 07-08 4652.780 1005.59 4678789.04 73752.660 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consistently following a particular method of accounting which is being accepted from year to year and in the absence of any contrary findings by the Assessing Officer, there is no merit in not adopting the method of valuation of stock being consistently followed by the assessee. Further we find support from the ratio laid down by the Hon'ble Supreme Court in Chainrup Sampat Ram Vs. CIT 24 ITR 481 (SC) (supra) wherein it has been held that the value of stock cannot be appreciated higher than the cost because the closing stock is not the source of profit for the assessee. It has also been held by the Hon ble Supreme Court that the closing stock is to be valued either at cost or market value, whichever is low. In the facts and circumstances of the present case, we are in conformity with the order of CIT(A) and uphold the same. There is no merit ill adopting the weighted average cost method for valuation of inventory of stock in the circumstances of the case. We confirm the deletion of addition made by the Assessing officer totaling ₹ 52,23,753/-. The ground of appeal raised by the Revenue is thus dismissed. 7.3. In any event, we hold that no addition could be made tow ..... X X X X Extracts X X X X X X X X Extracts X X X X
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