TaxTMI 
TaxTMI 
2001 (2) TMI 28
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....B.B. Naik, has appeared for the Revenue whereas the learned advocate, Shri J.P. Shah, has appeared for the assessee in all these cases. 3. In I.T.A. No. 351 of 1999, which has been filed under the provisions of section 256(2) of the Income-tax Act, 1961 (hereinafter referred as "the Act"), it has been prayed by the applicant that the Income-tax Appellate Tribunal be directed to refer to this court the following two questions arising out of the order dated May 12, 1996, passed by the Income-tax Appellate Tribunal, Ahmedabad Bench "B", in I.T.A. No. 1843/Ahd of 1990, for its opinion. "(1) Whether the Appellate Tribunal is right in law and on facts in confirming the order passed by the Commissioner of Income-tax (Appeals) deleting ....
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....148, the Assessing Officer added the said amount to the income of the assessee while framing the assessment. 6. Being aggrieved by the addition of Rs.2,93,56,000, the assessee preferred an appeal before the Commissioner of Income-tax (Appeals). The Commissioner of Income-tax (Appeals) allowed the appeal and directed deletion of the amount referred to herein above. The Commissioner of Income-tax (Appeals), while allowing the appeal, observed that in subsequent assessment years, the change made by the assessee in the method of valuation was accepted. More over, the changed method of valuation of stock was also in accordance with one of the accepted methods of accounting. The submission of the assessee that the change was made so as to have....
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....pellate Tribunal be directed to refer the questions stated herein above to this court for its opinion. 9. So far as Tax Appeals Nos. 758 to 761 of 1999 are concerned, the impugned orders which have been passed by the Tribunal and which are the subject-matter of the said appeals are based on the Tribunal's order which is a subject-matter of I.T.A. No. 351 of 1999. In the circumstances, we do not think it necessary to narrate the facts giving rise to the said appeals especially in view of the fact that the legal issue which has been involved in all the appeals and the I.T.A. is the same. 10. The learned advocate, Shri B.B. Naik, appearing for the Revenue, has submitted that in all the cases there was an effort on the part of the ass....
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....ng all direct costs to the material in process and the finished goods for arriving at the valuation of material in process and finished goods. According to him, if the changed method was also one of the accepted methods of accounting and when all units in the same industry were following the method which was adopted by the assessee, there was no reason for the Revenue to apply the principle laid down in the case of McDowell and Co. Ltd. [1985] 154 ITR 148 (SC), as there was no intention on the part of the assessee to reduce its taxable income with an oblique motive. According to him, even the Accountant Member had come to the conclusion that behind the change in the method of stock valuation, there was no mala fide intention on the part of ....
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....99 is concerned, in our opinion, no question of law is arising out of the impugned order passed by the Tribunal. In our opinion, even the appeals filed by the Revenue deserve to be rejected for the following reasons. 15. There is 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 is very clear that only with a bona fide intention the assessee had changed the method of stock valuation. It is 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, ....
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....assessee to change the method. 18. Even the Madras High Court in the case of CIT v. Carborandum Universal Ltd. [1984] 149 ITR 759, has held that if the method of stock valuation is changed and if the change is bona fide and the changed method has been continued, the difference arising in the income on account of the changed method is not includible in the income of the assessee during the relevant assessment year. 19. It is pertinent to note that even the Karnataka High Court has taken a view that when the method of stock valuation is changed and the change was bona fide, the change made by the assessee cannot be objected to by the Revenue. 20. Moreover, in CIT v. Haryana Minerals Ltd.[2000] 242 ITR 704, the Punjab and Haryana High....