TaxTMI 
TaxTMI 
2016 (6) TMI 895
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....ces of principal raw material viz., cement & HTS. Special cement Rs. 425/- per tonne for works station/works siding if any. High Tensile Steel Rs. 6300/- per tonne. (Strand Wire) If the cost of raw material, as indicated above, is increased or decreased, the contract price shall be correspondingly varied with effect from the date of such increase or decrease by the amount of variation in the prices of principal raw material that may be actually purchased after the relevant date and ruing the period of supply of concrete sleepers subject to a running ceiling of the quantity required for concrete sleepers remaining to be manufactured after the relevant date." 3. Pursuant to the clause as referred to above, the appellant-assessee herein was entitled to the escalated price incurred for supply of special cement and High Tensile Steel (Strand Wire). Accordingly, the assessee has raised its bill with the authorities. The assessee has incurred expenses for the relevant assessment years, namely, assessment years 1984- 85, 1985-86 and 1986-87. 4. Learned advocate Mr. Shah for the appellant has taken us to the order of t....
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....e accounting year during which the provision was made for the liability. The liability was not a contingent liability. The High Court was not right in taking a view to the contrary." 6. The learned counsel for the appellant has placed reliance on the decision of the Bombay High Court in the case of Taparia Tools Ltd. v. Joint Commissioner of Incometax reported in (2003) 260 ITR 102 where the court has observed and held as under: "Whether matching concept in which revenue and income earned during an accounting period, irrespective of actual cash in flow, is required to be compared with expenses incurred during same period, irrespective of actual outflow of cash, is very relevant to compute taxable income, particularly in cases involving DRE - held yes - Whether though ordinarily revenue expenditure incurred only and exclusively for business purposes must be allowed in its entirety in year in which it is incurred, in instant case, Assessing Officer was justified to spread expenditure over life of debentures because allowing entire expenditure in one year might give a distorted picture of profit of a particular year - Held yes." 7. Reliance has been placed on the decision of ....
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....reliance has been placed on the decision of this court in the case of Commissioner of Income-tax v. Atul Products Ltd. reported in (2002) 255 ITR 85 wherein it has been held as follows: "Looking to the facts of the case, no question of law is arose out of the impugned order passed by the Tribunal. Even the appeals filed by the Revenue deserved to be rejected. There was a finding of fact by the Tribunal to the effect that the change made in the method of stock valuation by the assessee was not with a mala fide intention. Thus, it was very clear that only with a bona fide intention, the assessee had changed the method of stock valuation. It was true that, as a result of the change made in the method of stock valuation, the taxable income of the assessee had been reduced. Any change in any method of stock valuation is bound to make some change in the taxable income. Simply because, by virtue of the change introduced by the assessee, the taxable income of the assessee had been reduced, by no stretch of imagination, it could be said that the assessee had an intention to deliberately undervalue its stock so as to reduce its tax burden. It has been held by the Calcutta High Court....
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....ethod of valuation of stock from total cost to `direct cost'. The revenue's main contention was that the new method should be applied both to the closing and opening stock of the year in order to get a true picture of the assessee's profits, was also correctly rejected by the Tribunal. If the assessee was called upon to apply the new method of valuation to the opening stock as well, then in consequence thereof, the value of the closing stock of the preceding year would also get altered, calling for a modification of the assessment for the preceding year. Thus, if the revenue's stand were to be accepted, it would lead to the position that the assessee would not be able to change the method at all. Merely because the new method adopted by the assessee was detrimental to the revenue, the assessee could not be denied the right to change the method. Moreover, as pointed out by the Tribunal, the apparent detriment to the revenue in the current year could get adjusted and would disappear in course of time, as the new method was to be followed consistently from year to year. So long as the method of valuation adopted by the assessee got recognition from the practising accountants and the c....
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....wn that by showing this expenditure in a spread over manner in the books of account, the assessee had initially intended to make such an option. However, it abandoned the same before reaching the crucial stage, inasmuch as, in the income-tax return filed by the assessee, it chose to claim the entire expenditure in the yar in which it was spent/paid by invoking the provisions of section 36(1)(iii) of the Act. Once a return in that manner was filed, the AO was bound to carry out the assessment by applying the provisions of that Act and not to go beyond the said return. There is no estoppel against the Statute and the Act enables and entitles the assessee to claim the entire expenditure in the manner it is claimed." 11. The learned counsel for the appellant has relied on the decision of this court in the case of Commissioner of Income-tax vs. Unique Mercantile Service (P) Ltd., reported in (2015) 56 Taxmann.com 429 (Gujarat) in which it is held as under: "In view of the aforesaid discussion, the Tribunal has rightly considered that the method of accounting should be such from which the correct profit of each year can be deducted and that as per the method adopted by the revenue,....