2005 (7) TMI 92

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....n-progress was to be taken at the cost of raw material consumed and no part of direct labour, overheads was allocable to it and that the ratio laid down in CIT v. British Paints India Ltd. [1991] 188 ITR 44 (SC) did not apply to the case?" 2. The present reference relates to the assessment year 1986-87. 3. The brief. Facts of the case are as follows: On facts, the assessee is a company engaged in the manufacturing of electronic induction heating equipment. The Tribunal found that the assessee had admittedly been manufacturing goods which were tailor-made for the specific requirements of its customers and unless the whole of the machinery was complete, the work-in-progress by itself had no other utility. 4. The assessee had....

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....the correct valuation of the work-in-progress even on the cost basis is the raw material consumed and the expenses on the labour and also overhead expenses on the same, yet in certain cases the said ordinary principle has to be ignored. In our opinion, in this case admittedly the assessee had been manufacturing goods which are tailor-made for the specific requirements of its customers. Unless the machine is complete, the work-in-progress by itself has no other utility. The market value of the work-in-progress can be determined only by dismantling the entire work-in-progress and separately, because the machine which is in progress is the work-in-progress cannot be sold as it is. Besides that, unless the machine is complete and approved by th....

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.... market except the customer who has placed the order. Besides that, the disturbing system of valuation in this case will create further complications in the maintenance of accounts. Admittedly, the assessee has been following this system for the last 7 years and no objection was raised by the Revenue and he has also been following the same in the subsequent years. The assessee-company being a progressive one and admittedly giving out profits on progressive scale from year to year, cannot escape from the clutches of the Revenue and the said value has to be reflected in its accounts in the subsequent years and thereby paid the tax as well. In view of the special facts and circumstances we feel that it will be an exercise in futility to change....