2018 (2) TMI 1698

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....k of finished goods as made by the Assessing Officer, in proceedings u/s. 143(3) of the Income Tax Act, 1961; in short "the Act". 2. We notice at the outset that the CIT(A)'s order under challenge discusses at length all the relevant facts, assessment findings as well as assessee's contention as follows: "4.3 Decision: I have carefully considered the facts of the case, the assessment order and the written submission of the appellant. The AO has made an addition of Rs. 59,91,122/- to the income of the year as, in his opinion the change in method of valuation of closing stock was done with the intention to reduce profit. The appellant used to earlier value the opening and closing stock by reducing the profit margin from t....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....taxes in the subsequent assessment year is also. It has been submitted by the appellant that the closing stock of the current year would be the opening stock of next financial year and because of change in the method of stock valuation, if the gross profit is lower in current year than automatically the gross profit of next year would be higher. Accordingly there would not be any consequential tax effect. It has been submitted by the appellant that in the subsequent year the appellant has shown income of Rs. 1.86 crores from the business and a total income of Rs. 2.13 crores and paid taxes of Rs. 71.53 lakhs. It has accordingly been submitted by the appellant that there was no intention on the part of the appellant to reduce taxable income ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....noted from the facts available before me that the appellant has made a turnover of Rs. 4.84 crores during the current Assessment Year and has disclosed ail income of Rs. 1.92 crores in subsequent Assessment Year i.e. 2009-10, the appellant made a turnover of 4.84 crores and disclosed an income of Rs. 2.13 crores. In both the years the appellant had disclosed income from business at Rs. 1.66 crores and 1.86 crores respectively. It is therefore, apparent from these figures that the appellant has not tried to suppress or reduce the profit of the current year in order to reduce the tax liability. Had it not changed the method of valuation, the profit for next year would have been less by an amount of Rs. 59.22 Lacs. The appellant is paying tax ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... Amount Depreciation on plant & machinery 5,92,315 Quantity manufactured during the year (strips) 54,78,565 Rate of depreciation arrived to quantity manufactured 0.11 Closing stock 18,33,511 Value of depreciation on P/M on closing stock 1,98,230 Therefore, the valuation made by the appellant is less to the extent indicated above as the appellant has not allocated the cost of depreciation on Plant and Machinery, which should have been done in accordance with the AS-2. Accordingly, the valuation of the closing stock is hereby enhanced by an amount of Rs. 1,98,230/-. In view of the above discussion, it is held that the appellant was justified in changing the method of valuation by adopting actua....