TaxTMI 
TaxTMI 
2014 (12) TMI 13
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....short, "the Tribunal") in ITA No.968/Chandi/91, for the assessment year 1989-90, claiming following substantial questions of law:- "1) Whether on the facts and in the circumstances of the case, the learned Income Tax Appellate Tribunal was right in directing to work out the value of finished goods lying at port on the basis of average cost? 2) Whether on the facts and in the circumstances of the case, the learned Income Tax Appellate Tribunal was right in holding that deduction under Section 80I is admissible on the Duty Draw back, the receipt of which is not attributable to conduct of any manufacturing activities by the respondent? 2. Briefly, the facts necessary for adjudication of the controversy involved as narrated in the appe....
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....,604/- which was claimed by the respondent. The assessment was completed at income of Rs. 3,89,380/- vide order dated 29.11.1990, Annexure A.1 under Section 143(3) of the Act. Aggrieved by the order, the assessee filed appeal before the Commissioner of Income Tax (Appeals) [CIT(A)]. Vide order dated 4.3.1991, Annexure A.2, the CIT(A) partly allowed the appeal holding that the Assessing officer should value the acrylic yarn on actual cost basis and cotton yarn on the basis of weighted monthly cost instead of the cost taken by the Assessing officer at the time of assessment. As regards finished goods lying in the docks for shipment and contracted to be sold, it was directed that the same should be valued at contract rates (Invoice rates) plus....
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....of actual cost incurred by the assessee. Adverting to the second question, learned counsel for the revenue on the strength of the judgment of the Apex court in Liberty India vs. CIT, (2009) 317 ITR 218 urged that the issue was concluded in favour of the revenue and that the Tribunal had erred in allowing deduction under section 80I of the Act on the duty draw back which was not permissible. 5. On the other hand, learned counsel for the assessee submitted that the Tribunal had categorically recorded a finding that the assessee had been following average cost method which was a recognized method by the Institute of Chartered Accountants and in view of the judgment of the Apex Court in CIT vs. British Paints India Limited, (1991) 188 ITR 44....
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....y bound to examine as to whether the method of valuation as adopted by the assessee has been regularly followed or not and as to whether the correct profits and gains could be deduced from the accounts maintained by following the said method. It is observed that in the present case, it is not disputed that the assessee has regularly followed the method of valuation of stock on the basis of average cost. Further there is no specific finding by the AO that the profits cannot be correctly deduced on the basis of the method of valuation followed by the assessee. The provisions of section 145 have not been specifically invoked in the present case. In view of the foregoing facts, we therefore feel that the learned CIT(A) has rightly held in para ....