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TMI Blog2005 (3) TMI 65X X X X Extracts X X X X X X X X Extracts X X X X ..... . While disposing of all these petitions by a common judgment, we would be referring to the facts of I.T.A. No. 129 of 2003. The assessee-company, respondent herein, is a private limited company carrying on the business of breeding and maintenance of horses. It also carries on agricultural activity, the produce of which is used as feed and fodder for the horses. During the relevant assessment year the respondent-company filed the return of income declaring a loss of Rs. 37,078 and net agricultural income of Rs. 12,41,904. As per records, the assessee maintained a single composite account for both the business of horses and the agricultural activities. After issuing a notice to the assessee, the Assessing Officer called upon the respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opposed to any principle of costing known to the world. Moreover, the assessee's argument that it has been following this method all through also is not altogether correct inasmuch as the assessee followed a different method of valuation till the assessment year 1975-76. Till the assessment year 1975-76, income from livestock breeding was exempt and so the assessee valued the foals at the net realisable value. But from the assessment year 1976-77, the law was amended and income from livestock breeding was subjected to tax. Pursuant to this change in law, the assessee also changed its method of valuation of foals. It switched over to the method of valuing foals born and held at nil from the assessment year 1976-77. Thus, the switch-over from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the method of valuation followed by the appellant should not have been disturbed by the assessing authority unless there was cogent material for doing the needful. The sale proceeds of the foals are being accounted for by the assessee on sale and it had not been included in the valuation of the foals in its opening stocks. In holding that the valuation as done by the assessee should not have been disturbed by the Assessing Officer, I gain strength from the order of the Income-tax Appellate Tribunal in the case of Smt. Mahendra Kumari." Both the assessee as well as the Department being dissatisfied with the order of the first appellate authority, preferred an appeal before the Income-tax Appellate Tribunal against the order of the fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Income-tax (Appeals) is justified in deleting the notional valuation of foals. This ground of the Revenue fails. The next controversy is the same as the valuation of foals. Under this ground the appellant had shown the net realisable value of broodmares as against the cost actually incurred by it while purchasing them. The learned Departmental Representative stated that 'under the Income-tax Rules, no depreciation is allowable on livestock. The claim of the assessee is as such not in order. In reply, Shri Ganeshan submitted that the appellant has shown the net realisable value of broodmares as against cost. The Department has accepted the net realisable value in the past and intervening years and also in subsequent years. When such an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dopted by the assessee-company was correct and did not violate any provisions of the Act or in any way result in avoidance of payment of tax. The basic controversies raised in the present case primarily relate to the foals born in the relevant assessment year and the depreciation claimed on the horses. Both these aspects are based on factual determination and do not prima facie disclose any legal controversy. It is a settled principle that in regard to matters of fact, the Appellate Tribunal would normally be the final authority unless the findings arrived at by the authority was so perverse as to render the principles of law applicable, ineffective and inoperative. In the present case, the assessee had been fully reflecting the sale price ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [1991] 188 ITR 44, 47 the Supreme Court has held: 'Section 145 confers sufficient power upon the Assessing Officer-nay, it imposes a duty upon him-to make such computation in such manner as he determines for deducing the correct profits and gains. This means that where accounts are prepared without disclosing the real cost of the stock-in-trade, albeit on sound expert advice in the interest of efficient administration of the business, it is the duty of the Assessing Officer to determine the taxable income by making such computation as he thinks fit. What is the profit of a trade or business is a question of fact and it must be ascertained, as all facts must be ascertained, with reference to the relevant evidence, and not on doctrines o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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