Sec 145A said for valuation of inventory method to be adopted is the method of regularly used by the assessee but as per AS 2 changes can be adopted if only statute permit

Last updated: 12 March 2012

Court :
INCOME TAX APPELLATE TRIBUNAL

Brief :
On the observation we find the following fact... The assessee company is engaged in the business of manufacture and sale of writing instruments. During the relevant assessment year, the assessee has changed the method of valuation of stock. Due to the change in the method of valuation of stock, the income of the assessee has been returned lesser by Rs.11,60,494/-. The Assessing Officer asked the explanation of the assessee and found it unacceptable and held that according to the provisions of section 145A of the Income-tax Act, 1961, for valuation of inventory, the method to be adopted is the method of accounting regularly employed by the assessee. The assessee company had changed its method of valuation of inventory which is not allowed under the provisions of section 145A and he made an upward adjustment in the income of the assessee of Rs.11,60,494/-

Citation :
Luxor Writing Instruments Pvt. Ltd., 5, Okhal Industrial Estate, Phase – III, New Delhi.(PAN: AAACL1980D)(APPELLANT)Vs. DCIT, Circle 4 (1),New Delhi. (RESPONDENT)