TaxTMI Login
AI Drafter - (New and Powerful) ✕
Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
Just a moment...
AI Drafter - (New and Powerful) ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
Press 'Enter' to add multiple search terms. Rules for Better Search
Use comma for multiple locations.
---------------- For section wise search only -----------------
Accuracy Level ~ 90%
of 
Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
Note
Bookmark
Share
Don't have an account? Register Here
of Press 'Enter' after typing page number.
Issues: (i) whether chicks in a poultry business constitute capital assets or form part of stock-in-trade; (ii) whether the opening and closing stock of chicks is to be valued on the basis of realisable value or on the settled rule of cost or market price, whichever is lower.
Issue (i): whether chicks in a poultry business constitute capital assets or form part of stock-in-trade
Analysis: The amendment to the definition of "plant" in section 43(3) of the Income-tax Act, effected by the Finance Act, 1995, supported the view that birds being livestock could not be treated as capital assets. On that basis, chicks in a poultry-farm were required to be treated as part of the stock-in-trade of the business.
Conclusion: Decided against the assessee and in favour of the Revenue.
Issue (ii): whether the opening and closing stock of chicks is to be valued on the basis of realisable value or on the settled rule of cost or market price, whichever is lower
Analysis: In a running business, stock-in-trade must be valued at cost or market price, whichever is lower. The rule reflects established commercial practice and accountancy, and the stock valuation could not be sustained on the basis of realisable value as adopted by the Tribunal.
Conclusion: Decided against the Revenue and in favour of the assessee.
Final Conclusion: The dispute was answered partly for the Revenue on the character of the chicks as stock-in-trade and partly for the assessee on the method of valuation of the chicks' stock.
Ratio Decidendi: Chicks in a poultry business, being livestock, are not capital assets and are to be treated as stock-in-trade, but such stock must be valued in accordance with the settled commercial rule of cost or market price, whichever is lower.
TaxTMI 
