2026 (2) TMI 570

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....- by the ld. CIT (A) as made by the ld. AO in respect of revaluation of closing stock. 2.1. The facts in brief are that the assessee filed the return of income on 08.10.2015, declaring total income at Rs. 2,34,360/-. Thereafter, the case of the assessee was selected for scrutiny and notice u/s 143(2) and 142(1) of the Income-tax Act, 1961 (the Act) along with questionnaire were issued and duly served upon the assessee. On perusal of the tax audit report, the ld. AO noted that the assessee had revalued damaged stocks having market value of Rs. 1,28,78,973/- at Rs. 2,80,134/-. The ld. AO issued show cause dated 18.12.2017 asking the assessee to substantiate the reason, basis and procedure of revaluation of such stock and why the reducti....

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....valuation loss of Rs. 26,88,599/- [Rs.1,25,98,834 (-) Rs. 99,10,235/-] was provided during the relevant FY 2014-15. He thus contended that the impact on profitability during the relevant year was Rs. 26,88,599/- and not Rs. 1,25,98,834/-. The ld. AR thereafter took us through the stock verification statements of FYs 2013-14 and 2014-15 along with the stock valuation reports signed by the auditor and he pointed out that the further reduction in value of Rs. 26,88,599/- provided during the year, was attributable to the revision in the estimation of realizable value of old / damaged stock at 5% of MRP as opposed to 10% of MRP, already provided upto immediately preceding year. The ld. AR thus claimed that the basis of reduction in valuation of ....