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TMI Blog2018 (6) TMI 1475X X X X Extracts X X X X X X X X Extracts X X X X ..... reinafter 'the tribunal') dated 27th March, 1998 in ITA 2362 (Cal) of 1995 in the assessment year 1990- 91 to be answered by this Court. "1. Whether on the facts and in the circumstances of the case the Tribunal was justified in law in holding that the assessee is not entitled to value the shares and securities which were held to be its stock in trade on the basis of the cost or market price whichever is lower as claimed in the return and the valuation of the closing stock was to be made on the cost basis as disclosed in the Balance Sheet and the profit or loss, if any, is to be determined on such basis? 2. Whether on the facts and in the circumstances of the case and in view of the directions of the C.I.T. (Appeals) that in regard to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n that this question arose in the assessment year 1990-91. They were identical to the questions sought to be raised by the assessee bank in the assessment years 1985-86, 1986-87 and 1987-88. For some reason, the questions raised in this reference for the assessment year 1990-91 could not be included in the statement of case from 1985-86 to 1987-88. Since, for those assessment years only question No.2 was referred to this court on reference, an identical reference ie. of question No.2 was made to this court for the assessment year 1990-91. The Tribunal stated that its statement of case in the referral Order dated 29th January 1999 for the said earlier assessment years be treated as a statement of case for the subject assessment year 1990-91. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment year in which the accounting principle was changed so that they could show the change in value of the closing stock and account for the losses accordingly. The tribunal by its order dated 27th August, 1998, relying on the decision of this court in UCO BANK reported in 200 ITR 68(Cal) ruled that the assessee was not entitled to claim a different basis of valuation of closing stock of these shares and securities from the one adopted its books of accounts and audited annual accounts. The United Commercial Bank case came to be considered by the Supreme Court in United Commercial Bank, Calcutta -vs-Commissioner of Income Tax, West Bengal-III, Calcutta reported in (1999) 8 SCC 338. It held as follows on 29th September, 1999, after t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the purpose of statutory balance sheet, and for the income tax return, valuation was at cost or market value whichever was lower. That practice was accepted by the Department and there was no justifiable reason for not accepting the same. Preparation of the balance sheet in accordance with the statutory provision would not disentitle the assessee in submitting income tax return on the real taxable income in accordance with a method of account adopted by the assessee consistently and regularly. That cannot be discarded by the departmental authorities on the ground that assessee was maintaining balance sheet in the statutory form on the basis of the cost of the investments. In such cases, there is no question of following two different method ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement and order. It follows that the part of the order of the tribunal dealing with the accounting method for valuation of the closing stock of the assessee is set aside.
We direct the Registrar General of this Court to send a copy of this order to the Income Tax Appellate Tribunal 'A' Bench. The said tribunal is directed to revise its order dated 27th March, 1998 on the basis of this judgment and order.
The tribunal is requested to pass the necessary order within three months of communication of this order.
Both the reference applications ITR No.7 of 2000 and ITR No.19 of 1999 are disposed of.
Certified photocopy of this order, if applied for, be supplied to the parties upon compliance with all requisite formalities. X X X X Extracts X X X X X X X X Extracts X X X X
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