Closing stock valuation for tax purposes follows the best available market price, not a restricted replacement value approach.

For income-tax purposes, trading profits were assessed under an accounting approach in which closing stock could be valued at the lower of cost or market value, but the phrase "market value" was not given a restricted meaning for retailers. The Court held that market value ordinarily means the price obtainable in the market offering the best price, and modern accounting opinion did not justify treating replacement or wholesale value as the relevant measure where retail market value was the proper market value. The taxpayers were therefore not entitled to adopt replacement or wholesale value for unsold closing stock, and the Revenue's valuation basis was upheld.

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Issues: Whether a retailer could, for income-tax purposes, value unsold closing stock at replacement or wholesale market value where that value was lower than cost, even though the retail market value was higher.

Analysis: The statutory provision governing charge to tax on trading profits did not prescribe a specific stock-valuation rule. The accepted accounting formula was the lower of cost or market value, and the question was whether "market value" could be confined to replacement or wholesale value in the case of a retailer. The Court held that "market value" in that formula ordinarily means the price obtainable in the market that offers the best price, and that the evidence of modern accounting opinion did not justify giving the phrase an unnatural meaning so as to permit replacement value to be adopted where the retail market value was the relevant market value.

Conclusion: The taxpayers were not entitled to value closing stock at replacement or wholesale value in the circumstances, and the Revenue's basis of valuation was upheld.

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