2004 (11) TMI 82

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....he appellant is carrying on business of manufacturing of rice from paddy and its sale. During the course of assessment proceedings for the assessment year 1991-92, the Assessing Officer asked the appellant to intimate the basis of valuation of closing stock. The appellant stated that the valuation of the closing stock has been taken at the cost price. It had valued the common paddy at the rate of Rs. 199.87 per quintal and fine paddy at the rate of Rs. 200 per quintal. The Assessing Officer directed the appellant to give the market rate of fine paddy and common paddy as on March 31, 1991 whereupon the appellant filed a letter from the marketing inspector in which supporting price for purchase of common paddy has been quoted at the rate of R....

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.... needs no interference. He further submitted that the appeal does not raise any substantial question of law as it is concluded by findings of fact. Having heard learned counsel for the parties, we find that the Tribunal has found that the appellant was not valuing the closing stock as per the average cost price. According to the Tribunal, the appellant while taking the closing stock at average cost price has also taken the value of opening stock as on April 1, 1990 whereas normally the opening stock being purchase for earlier year is utilized for manufacturing and it is inconceivable that the opening stock was available at the end of the year and, therefore, the value of the opening stock cannot be taken even for the purpose of determini....

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....nture it would be impossible accurately to assess the true profits without taking into account the value of the stock-in-trade at the beginning and at the end of the year." In the case of CIT v. British Paints India Ltd. [1991] 188 ITR 44, the apex court has held that for computation of the true profits of the year in the case of a trade or adventure, each year being a self-contained unit, the value of the stock-in-trade at the beginning and at the end of the accounting year and by ascertaining the difference between them has to be taken into account. It has further held that it is a well recognized principle of commercial accounting to enter in the profit and loss account the value of the stock-in-trade at the beginning and at the end o....