2011 (5) TMI 1000 - AT - Income Tax

Tribunal favors assessee's accounting method in work-in-progress valuation dispute

The Tribunal allowed the appeal filed by the assessee, ruling in favor of the consistent accounting method and previous decisions supporting the ... - Issues involved: The only issue involved in the appeal is the addition of Rs. 2,67,740/- to the total taxable income of the assessee u/s work in progress.Facts and Decision:- The assessee, a private limited company, processes art silk cloth on a job work basis.- The AO calculated work in progress at Rs. 2,67,740/- based on certain parameters.- The ld. CIT(A) upheld the addition, citing the decision of the Hon. Supreme Court regarding the true purpose of crediting the value of unsold stock.- The assessee argued that the method of valuing stock was consistent and legal.- The Tribunal referred to previous cases where similar issues were decided in favor of the assessee.- The Tribunal concluded that the issue was covered by previous decisions and allowed the appeal filed by the assessee.Key Points from Tribunal's Decision:- The Tribunal highlighted that in cases where business is done on a job work basis, work-in-progress may not be applicable.- The Tribunal emphasized the importance of consistent accounting methods and the lack of justification for disturbing such methods.- The Tribunal referred to specific accounting principles to support the assessee's position.- The Tribunal dismissed the Revenue's appeal based on the precedent set by previous cases.Conclusion:The Tribunal allowed the appeal filed by the assessee, ruling in favor of the consistent accounting method and previous decisions supporting the assessee's position on work-in-progress valuation.