9911796707
TMI Blog2005 (7) TMI 92X X X X Extracts X X X X X X X X Extracts X X X X ..... hole of the machinery is complete, work-in-progress by itself has no other utility. The assessee has valued the work-in-progress on the basis of raw material consumed at cost price. This method has been adopted since last several years and also in subsequent years. No objection has been raised by the Revenue in the previous years to such valuation. It was found that assessee-company was a progressive company and shown out profits on progressive scale from year to year and cannot escape from the clutches of the Revenue. The closing stock of this year is the opening stock of the subsequent year and, hence, a consistent method adopted for valuation by the assessee should not be disturbed. Therefore, the same method adopted in the year under co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the assessee at cost of raw material used. The overhead expenditure attributable to the machinery components under fabrication were not proportionately included while the alleged expenses had been charged to the profit and loss account. Consequently, the Assessing Officer, while framing the assessment, came to the conclusion that the real value of work-in-progress was not shown and thereby a sum of Rs. 9,78,000 was added. 5. In appeal, the learned Commissioner of Income-tax (Appeals) vide his order dated March 16, 1990, confirmed the order of the Assessing Officer in principle but reduced the addition with a finding that overhead expenses were only to the extent of around 25.22 per cent. of the raw material consumed and, thus, sustain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said machine. Under these circumstances, the work-in-progress on the basis of raw material cannot be said to be a complete arbitrary method of valuation of the work-in-progress. The hon'ble Supreme Court in the case of Investment Ltd. [1970] 77 ITR 533 has laid a ratio that a taxpayer is free to employ for the purpose of his trade, his own method of keeping accounts and for that purpose of value his stock-in-trade either at cost or at market price. A method of accounting adopted by the trader consistently and regularly cannot be discarded by the departmental authorities on the view that he should have adopted a different method of keeping account or of valuation. The method of accounting regularly employed may be discarded only if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee and accepted by the Revenue as well in the earlier years. Under these circumstances, we hold that the addition on the basis of under-valuation of the stock which, in fact, is not the under-valuation but only adopting a different system of valuation is uncalled for in the case and the same is deleted. The issues are decided accordingly. 7. We have heard Sri A.N. Mahajan, learned standing counsel appearing on behalf of the Revenue and Sri B.K. Srivastava, learned counsel appearing on behalf of the assessee-respondent (hereinafter referred to as the assessee ). 8. We do not find any error in the order of the Tribunal. It is settled principle of law that the stock can be valued at the cost or at market rate. Admittedly, the assessee had ..... X X X X Extracts X X X X X X X X Extracts X X X X
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