TaxTMI 
TaxTMI 
2010 (7) TMI 209
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....tion of Rs. 2,18,03,931 made by the Assessing Officer and upheld by the Commissioner of Income-tax (Appeals) on account of travelling costs to be included in the valuation of workin-progress" 2. The company has changed the method of ascertainment of allowable overheads to the project from the assessment year 1996-97, which is the subject-matter of the present appeal. With the change in the method, the travelling costs hitherto considered had not been included in such allocation. The Assessing Officer did not accept the change in the accounting method and thus added the travelling cost of Rs. 2,18,03,931 as attributable to the work-in-progress, and as a consequence, the total income of the assessee was also increased. The Commissioner of ....
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....ion of the assessee that as per AS-2, the indirect travel cost was not to be added to the work-in-progress. It was also the contention of the assessee before the Tribunal that a change in the method of stock valuation, if bona fide, has to be accepted for the purposes of assessment and for its proposition, the assessee relied upon the following judgments : (i) CIT v. Mopeds India Limited [1988] 173 ITR 347 (AP) ; (ii) Melmould Corporation v. CIT [1993] 202 ITR 789 (Bom) ; (iii) Triveni Engineering Works Ltd. v. CIT [1987] 167 ITR 742 (All) ; (iv) CIT v. Mahalakshmi Sugar Mills Co Ltd. [1993] 200 ITR 275 ; [1993] 68 Taxman 108 (Delhi) ; and (v) CIT v. British Paints India Ltd. [1991] 188 ITR 44 (SC). 4. The assessee a....
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....ethod to a more rational method prescribed by AS-2. Therefore, it is to be seen that the change brought in by the assessee in the valuation of work-in-progress is genuine. Further, it is to be seen that the changed method is followed by the assessee in a consistent manner for all the subsequent assessment years and the Revenue has been accepting the same method for all the subsequent assessment years. Therefore, in the facts and circumstances of the case, we find that the decision of the lower authorities on this point is not justified." 6. Having regard to the aforesaid factual position as well as of legal position, we are of the opinion that no substantial question of law arises for the consideration. We may, however, discuss one....
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.... present location and condition ; and (d) selling and distribution costs." 8. This position could not be disputed by the learned counsel for the Revenue. Therefore, what remains to be ascertained is as to whether the assessee had added, in the cost of inventory, direct travelling cost and it is only indirect travelling cost which was not included. We may point out that even before the Commissioner of Income-tax (Appeals) it was specifically argued by the counsel for the assessee that travel costs directly charged had been charged off as an expenditure in the profit and loss account in the year in which the same was incurred and it is only indirect travelling cost which was not included. This very plea was raised before the Commissione....