TaxTMI 
TaxTMI 
TaxTMI 
2011 (2) TMI 1642
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....the closing stock as undervalued. 4. The assessee has shown closing stock as on 31st March, 1999 at Rs. 43,13,190 though initially the inventory was valued as per price prevailing in July, 1999 at Rs. 88,61,926. However, the assessee reduced its stock belonging to M/s Raghuvanshi Technical Services (RTS) of Rs. 4,59,942. Further, 8 per cent inventory was reduced as the current price was increased by 8 per cent. Further, reduction of 10 per cent was allowed by the assessee for dead inventory of more than 12 months and further the resultant stock was reduced by 40 per cent of the dead inventory of more than 12 months but less than 18 months Rs. 1,50,000 was further reduced on account of presumptive valuation of imported parts at indigenous....
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....rincipal company. Closing stock of Rs. 4,59,942 belonged to M/s RTS was also included in the total stock valuation. Further explanation in regard to closing stock shown by assessee was filed. It was further submitted that value of closing stock is adopted higher by Rs. 45,48,738, the trading results of the assessee company will altogether be different than the preceding as well as succeeding years, if the AO's valuation is taken the GP rate comes to 23.94 per cent. Such high GP rate was never achieved by the assessee company either in the preceding year or in the succeeding year. The details of GP rate shown in earlier years as well as in subsequent years were also filed. Reliance was placed on the decision of Hon'ble Supreme Court ....
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...., 2001. it is clear that in the year under consideration only in respect of stock of M/s Raghuvanshi Technical Services and reduction of stock by 8 per cent due to price increase in the year are the new features. In all the earlier years as well as subsequent years the dead inventory was valued by taking the fixed percentage as dead stock. The dissolution deed may be dt. 9th June, 1999 but dissolution took place from 1st April, 1999 and the stock was valued in the month of July. As per the dissolution deed the stock of the appellant included stock of Rs. 4,59,942 belong to M/s Raghuvanshi Technical Services and, therefore, when valuation is to be taken as on 31st March, 1999 the same deserves to be reduced. Copies of P&L a/c and balance she....
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....t of Rs. 4,59,942 and Rs. 6,72,159 are correctly done to take the valuation of stock at cost or market price whichever is lower. In respect of dead stock the AO has initially held that stock register was not produced but later on it was produced before the AO. But as there was no mention regarding model number etc. the AO did not accept authenticity of the stock register. However, as the spare part numbers are given against each item of the list provided to the AO, the deduction on account of obsolete stock cannot be denied. Dead stock is being carried forward from preceding year and valued at 10 per cent and 40 per cent of value if stock is more than 18 months old or less than 18 months but more than 10 months old respectively. This workin....
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....ear. The apex Court in that case has held that AO ought not to have rejected the application of the assessee filed under s. 154. In the present case similar s. 154 application is pending with the AO for subsequent year. As the valuation of closing stock done by the appellant is justified action of the AO is not approved. The AO is therefore directed to delete the addition made." The above findings of learned CIT(A) neither could be controverted nor any other material was brought on record to establish otherwise. It is also a matter of fact that if any addition is made on account of difference in valuation, then the effect has to be given in subsequent year. Various Courts have held that where there is no defect in maintenance of....