2015 (11) TMI 1360

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....ase is an investment and finance company. The return of income for the year under consideration was filed by it on 30.11.2006 declaring a loss of Rs. 5,93,678/-. During the course of assessment proceedings, it was noticed by the AO that there are no purchase and sale of shares made by the assessee during the year under consideration and the loss of Rs. 17,34,218/- was claimed by the assessee as a result of change in the method of valuation of closing stock of shares adopted by it. He, therefore, required the assessee to offer its explanation in the matter. In reply, it was submitted on behalf of the assessee company that the valuation of stock all along was adopted at cost. However, the statutory auditors during the year under consideration....

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.... for loss for the following reasons given in his impugned order. "I have gone through the working made out by the appellant in respect of valuation of these shares and also considered the facts relating to the guidelines of the Reserve Bank of India and the advice of the Auditors according to which it had become necessary to fall in line with the accepted procedure in regard to the valuation of such shares. Some decisions which the A.O. has referred in the order of assessment have been considered and it is seen that these are very old decisions whereas the guidelines of the Reserve Bank of India by which the appellant made the change in the valuation of shares has been done to fall in line with the present day requirements....

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....assessee thereon thus was clearly misplaced. He contended that all these relevant aspects, however, are not properly appreciated by the ld. CIT(A) while allowing the claim of the assessee for loss as a result of change in the method of valuation of stock, which is not justified. 5. The ld. Counsel for the assessee, on the other hand, strongly supported the impugned order passed by the ld. CIT(A) allowing the claim of the assessee for loss as a result of change in the method of valuation of closing stock of shares. He contended that although the stock of shares was earlier valued by the assessee at cost, the said method was changed on the basis of the opinion of statutory auditors, which was duly supported by the relevant RBI guidelines a....