Gujarat High Court Case Information System
Print
TAXAP/286/2008 5/ 5 ORDER
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
TAX
APPEAL No. 286 of 2008
=========================================================
THE
ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 6 - Appellant(s)
Versus
B.
SURESHKUMAR & CO (RF) - Opponent(s)
=========================================================
Appearance
:
MR
BB NAIK for
Appellant(s) : 1,
None for Opponent(s) :
1,
=========================================================
CORAM
:
HONOURABLE
MR.JUSTICE K.A.PUJ
and
HONOURABLE
MR.JUSTICE R.H.SHUKLA
Date
: 16/07/2008
ORAL
ORDER
(Per
: HONOURABLE MR.JUSTICE K.A.PUJ)
Heard Mr.B.B.Naik,
learned Standing Counsel appearing for the Revenue.
The Revenue has filed
this Tax Appeal under Section 260A of the Income Tax Act, 1961 for
assessment year 2003-04 against the order passed by the tribunal
dated 29.6.2007 in Income Tax Appeal No.635/Ahd/2007.
Mr.B.B.Naik, learned
Standing Counsel appearing for the appellant has submitted that the
Assessing Officer has made addition of Rs.52,75,902/- in the closing
stock of the assessee and determined the income of Rs.77,89,970/-.
Being aggrieved by the said order the assessee preferred an appeal
with the Commissioner of Income Tax (Appeals) which is confirmed by
the Appellate Commissioner on this issue. Being further aggrieved
by the said order of the Commissioner, Second Appeal was preferred
before the Income Tax Appellate Tribunal and the Tribunal vide order
dated 29.6.2007 allowed this issue in favour of the assessee and
deleted the said addition. He has further submitted that the reason
given by the Tribunal is not convincing one. The method adopted by
the Assessing Officer for valuation of closing stock on the basis of
average cost is a correct method. He has further submitted that the
Appellate Tribunal ought not to have deleted the said addition by
observing that the assessee is following valuation of the closing
stock according to the market value or cost of rough diamonds,
whichever is less. He has, therefore, submitted that the Tribunal
has committed error and substantial question arises from the order
of the Income Tax Appellate Tribunal.
We have considered the
submissions made by the learned Standing Counsel and perused the
order of the authorities. While allowing assessee’s appeal on this
issue the Tribunal has at length discussed the entire issue and also
referred to the judgment of the Hon’ble Supreme Court in the case of
Sanjeev Woolen Mills Vs. CIT, 279 ITR 434 SC. The
Tribunal has categorically held that the assessee had wherever found
that the rough diamonds are having cost less than the market value,
it had valued them at the cost. Wherever the market value of the
rough diamonds is less than the cost, the assessee has applied the
market value. This fact was not denied by the Assessing Officer.
Any objection raised by the Assessing Officer was against the market
value determined by the assessee. The onus is on the assessee to
prove that the market value of the stock is less than the cost but
it is a case where there is no independent evidence available which
may confirm the market value. In the case of rough diamonds it is
only the estimate, which can work out by the expert. If the
Assessing Officer was not satisfied with the market value taken by
the assessee, he could have taken the assistance of the expert but
the Assessing Officer merely rejected the method of valuation
consistently followed by the assessee and accepted by the Revenue in
the earlier year and hence without obtaining any expert’s opinion on
the subject the Assessing Officer could not have rejected market
value taken by the assessee. Even in the case of CIT Vs. British
Paints India Ltd. (Supra) the Hon’ble Supreme Court has accepted the
valuation of the stock at cost or market value whichever is lower to
be a matter entirely left to the discretion of the assessee.
In the above view of the
matter, we are of the opinion that the Tribunal has taken correct
view in the matter and finding arrived at by the Tribunal is finding
of fact and no question, much less substantial question of law,
arises out of the order of the Tribunal.
This Appeal is
accordingly dismissed.
(K. A. PUJ, J.) (R.
H. SHUKLA, J.)
kks
Top