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TMI Blog2017 (2) TMI 1226X X X X Extracts X X X X X X X X Extracts X X X X ..... the common impugned order was an error in affirming the valuation adopted by the assessee for its Slow-Moving Stock. The assessee, a public sector unit engaged in manufacture and distribution of fertilizers, carried inter alia stock which was reflected in its balance sheet. For AY 2004-05 the Comptroller and Auditor General (CAG) observed as follows: "2(a) Further to our comments in the Annexure referred to in paragraph 1 above, we report that: provisions for diminution in value of obsolete/ surplus/ non moving items of stores and spares have been am de based on Management assessment. Pending final detailed analysis of these stocks, consequential impart thereof, if any, on the accounts remains unascertained." 2. In view of the above obse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AI, New Delhi. 9.2 In the present case, the assessee had to adhere to AS-2 due to the remarks by CAG in the annual report for immediate previous year i.e. F.Y. 2004-05. This change was done on the basis of the remarks by Auditors which was supported by opinion of highly reputed engineer valuer, after proper on the spot duty of nature of plant & machinery and associated non moving stocks of stores and spares held in inventory. Thus, there was no mala fide in valuing the slow moving/ surplus/ obsolete Stores and Spare parts as per the valuation report received from engineering valuer. 9.3 In the instant case, the valuation of slow-moving/ surplus/ obsolete stores, spares was made on the basis of the report of the approved valuer, and it c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al that the write off was on account of deterioration in the condition of the non-moving stores since the assessee's plants were located in remote places and near the sea. The non-moving stores and spares were corroded over a period of time due to wear and tear. This method of accounting having been adopted in the earlier years, there was no reason for the Assessing Officer to disallow the same on the ground that the accounting method had changed. 9. Accordingly, we are of the view that the judgment of this Court in the case of Heredilla Chemicals will not affect the write off by the assessee in the present case being distinguishable on facts. It is not merely on the basis of obsolescence of any particular equipment that the assessee ha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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