2007 (6) TMI 196

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..... d by P. P. S. Janarthana Raja J.— This appeal is filed under section 260A of the Income-tax Act, 1961, by the Revenue, against the order of the Income-tax Appellate Tribunal, Bench "A", Chennai, in I. T. A. No. 2966/Mds/04 dated September 1, 2006, raising the following substantial question of law : "Whether, on the facts and circumstances of the case, the Tribunal was right in holding that the assessee was entitled to value its opening stock in one way and the closing stock in another, during the relevant year when Accounting Standard 2 had come into effect in the earlier year itself ?" 2. The facts leading to the above substantial question of law are as under: The assessee is a company. The relevant assessment year is 2001-02 an .....

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..... ted that because of the valuation of opening and closing stock by different methods, there was a consequential reduction of total income declared for the year and hence the Assessing Officer is right in his opinion that the amount of Rs. 19.64 lakhs representing reduction of profit was includible in the total income of the assessee. 4. Heard counsel. The Institute of Chartered Accountants of India by its Accounting Standard (AS-2) (Valuation of inventory), has prescribed the standard for valuation of inventory. According to this standard, the inventory has to be valued at purchase cost price less commission and discount on purchase (if any) and the commission and discount on purchase in respect of the goods sold should be adjusted again .....

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..... ng as the method of valuation adopted by the assessee gets recognition from the practising accountants and the commercial world for valuation of stock-in-trade, the adoption of that method cannot be questioned by the Revenue unless the adoption of that method is found to be not bona fide or restricted for a particular year." 5. The Tribunal correctly followed the principles enunciated in the above judgment and came to the correct conclusion. The reasons given by the Tribunal are based on valid materials and evidence. Under these circumstances, we do not find any error or legal infirmity in the order of the Tribunal so as to warrant interference. 6. In view of the foregoing reasons, no substantial question of law arises for considera .....

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