Tribunal directs reassessment for securities valuation, allowing deductions & cautioning against double deductions.

The Tribunal allowed the appeals for assessment years 2011-12 and 2012-13, directing the Assessing Officer to determine the exact amount of loss on valuation of securities for both years. The Tribunal emphasized the assessee's entitlement to deductions under the law, permitted the switch to the "cost or market price, whichever is less" valuation method, and cautioned against double deductions resulting from changes in valuation methods. The matters were remitted to the AO for further assessment, ensuring a fair opportunity for the assessee to present their case.

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Issues:
1. Disallowance of loss on valuation of securities for assessment years 2011-12 and 2012-13.

Analysis:
A.Y. 2011-12:
The primary issue in this appeal was the disallowance of a loss on the valuation of securities claimed by the assessee. The Assessing Officer (AO) disallowed the deduction as the loss was not accounted for in the books of account. However, the Tribunal referred to the judgment in the case of Kedarnath Jute Manufacturing Company Vs. CIT and held that the absence of entries in the books of account cannot be decisive for disallowing a deduction if the assessee is entitled to it under the law. The Tribunal disagreed with the AO's view and allowed the deduction.

The next issue was whether the assessee was entitled to value its securities at "cost or market price, whichever is less." The Tribunal cited the principle established by the Supreme Court in Chainrup Sampatram Vs. CIT, which allows stock valuation under this method. The Tribunal held that the assessee was within its rights to switch to this valuation method and that the change cannot be rejected if consistently followed.

Regarding the quantum of the loss claimed, the Tribunal noted a lack of clarity on how the loss was computed under the new valuation method. As a result, the Tribunal set aside the order and remitted the matter to the AO for determining the exact amount of loss on valuation of securities. The AO was directed to provide a reasonable opportunity for the assessee to be heard.

Additionally, the Tribunal addressed the issue of double deduction due to a change in the valuation method. It directed the AO to ensure that the assessee does not receive double deductions by examining the impact of the change in valuation method on subsequent years.

A.Y. 2012-13:
The disallowance of a larger amount for the subsequent assessment year was also challenged by the assessee. Following the same reasoning as in the previous year, the Tribunal set aside the order and directed the AO to determine the issue in line with the decisions made for the earlier assessment year.

In conclusion, both appeals were allowed for statistical purposes, emphasizing the need for a proper determination of the loss on valuation of securities and prevention of double deductions.

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