9911796707
TMI Blog1983 (1) TMI 63X X X X Extracts X X X X X X X X Extracts X X X X ..... ically since its inception, was valuing its opening and closing stock for the purpose of arriving at its profits for every year, by following a uniform method, which was described as cost method.Cost of cloth as well as cloth in process and other unfinished goods was arrived at by working out cost of production in respect of such goods taking into account the stage up to which the production had reached by the end of the year or at the beginning of the year, as the case may be. As regards the Cost Of Taw material which went into finished goods or semi-finished goods, the total cost of such raw material and total quantity of such raw material, namely, cotton would be ascertained per pound or per kilogram, as the case may be, by dividing the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arn, there would be some wastage including removal of impurities, etc. In valuing the finished goods as well as goods in process, the petitioner divided the total cost of cotton, which had gone into production stream, by quantity of yarn produced, instead of quantity of cotton consumed in producing such yarn. As a result of this new method of working out cost, adopted by the petitioner, the closing stock for the purpose of balance-sheet and profit and loss account was valued at an amount which was higher, by Rs. 52,44,486, than the value adopted for the purpose of income-tax. In the course of assessment proceedings, for the assessment year 1975-76, the petitioner claimed deduction of Rs. 52,44,486 from the value of the closing stock shown i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed above. Under these circumstances, the respondent issued notice, annex. C, dated March 30, 1978, informing the petitioner that the income chargeable to tax for the assessment year 1973-74 had escaped assessment and calling upon it to file its return of income within thirty days of the service of the notice. The petitioner has filed this petition challenging the validity of the said notice. Facts and circumstances in the present petition are similar, though not identical with those involved in Special Civil Application No. 1940 of 1979, which we have disposed of today by a separate judgment [Aryodaya Spinning Weaving Co. Ltd. v. ITO [1983] 144 ITR 817]. In Special Civil Application No. 1940 of 1979 also, the ITO had sought to reopen th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f yarn in process followed by the assessee. For the reasons recorded in our judgment in the said Special Civil Application No. 1940 of 1979 [Aryodaya Spg. Wvg. Co. Ltd. v. ITO [1983] 144 ITR 817], we have held that there was no justification to reopen the assessment for the aforesaid two assessment years and consequently notices issued by the ITO under s. 148 read with s. 147 of the Act were declared to be invalid. In the present case, so far as the assessment year under reference is concerned, the petitioner did not adopt two methods of valuation of its stock as in Special Civil Application No. 1940 of 1979 The stock was, however, valued on cost method. The grievance of the respondent is that the cost was worked out by the petitioner wit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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