TaxTMI 
TaxTMI 
2012 (7) TMI 94
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....(a). On the facts and in the circumstances of the case and in law, the Ld. CIT (A) erred in allowing the valuation of closing stock as calculated by the assessee without considering the Accounting Standard-1 and decision in the case of DCIT vs. Samir Diamonds Exports Ltd. (71 ITR 75) through which the A.O. calculated the under valuation of closing stock at Rs.2,50,63,437/-. (b). On the facts and in the circumstances of the case and in law, the Ld. CIT (A) erred in deleting the estimated addition of Rs.10,00,000/- on account of defect for other kind of closing stock. 2. The appellant craves leave to add to, amend or alter the above grounds as may be deemed necessary. Relief claimed in appeal. The o....
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....k at weighted average cost consistently and the Department has accepted the same in earlier years and there is no change in the method of valuation. The method of valuation adopted by it was in consonance with the Income tax Act. It was further submitted that not only the valuation of inventories but the "cost of sales" has also been worked out accordingly. It was also pointed out that the A.O. has accepted the same method of valuation in the case of its sister concern, namely C.H. Jewellers (P) Ltd. The Ld. CIT (A) accepted the contentions of assessee and deleted the addition by holding as under:- "4.3.1 From a plain reading of the section it is seen that two things must be ensured - (a) that valuation is in acc....
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....taking into account each and every item of sales and purchase during the year. The amount of Sales-tax /VAT embedded in the value of purchase and sale has also been reflected in the weighted average cost. Accordingly, I am of the opinion that the rate of Rs.658.64 per gm applied by the assessee to the valuation of its closing stock of 22 ct. new ornaments was correctly determined. 4.3.3. It is also noteworthy that after elaborately dealing with the definition of weighted average cost, the A.O. has then proceeded to himself apply a simple average rate between the rate adopted by the assessee and rate of last purchase of ornaments. This rate of Rs.764/- per gram is also not the weighted average rate computed after ....
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.... correct valuation of stock is to disclose the correct picture of value of closing stock, which approximates the value necessary to bring the said stock in its present location and condition. The Ld. D.,R. relied on the decision of Apex Court in the case of British Paints India Ltd., vs. CIT (1978) 188 ITR 44 (SC) and the Tribunal decision in the case of DCIT vs. Samir Diamonds Exports Ltd. 71 ITD 75 (Mum.) 7. Ld. A.R. on the other hand submitted that the method of valuation of stock adopted by assessee was "weighted average cost" and not "simple average cost". The method has been consistently followed by the assessee and there is no change in the method. It was further submitted that the department has accepted the valuation method whil....
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....TJ (Chd.) 943 (b) ACIT vs. Shantilal Nagardas & Co. (ITA No.3362/Ahd/209). The Ld. A.R. thus urged that the order of CIT (A) be upheld. 8. We have heard the rival contentions, perused the material on records. It is an undisputed fact that the assessee has valued the stock at weighted average cost in the current year and the same method was followed by assessee in earlier years and it was accepted by the Department while finalizing the assessment u/s. 143(3). The assessee has also adopted the same method for arriving at the "cost of goods sold". The method of valuation is also in consonance with the I.T. Act and the Accounting Standards prescribed by ICAI. It is also an undisputed fact that the similar valua....