Law:

Section:

Section 145 of the Income-tax Act, 1961 - Method of accounting - Valuation of closing stock - Assessment year 1986-87 - Assessing Officer noticed that assessee did not disclose any value of certain bales of bagasses - Assessee explained that bagasse was meant for initial fuel and not for sale; for purposes of valuation, there was no further cost of bagasse in hands of assessee except for cost of wire used for baling and labour charges, which had been duly accounted for - Assessing Officer did not accept assessee's contention - According to him, bagasse, which remained unconsumed, was closing stock available with assessee as a byproduct which had a market value - He, accordingly, took market value of it and made addition - Tribunal found that assessee had been consistently valuing bales of bagasses on direct cost method on its baling charges and cost of wires and that same was evident from fact that assessee had disclosed its value at Rs. 7,557 in its books under head 'Stores and spares', - Tribunal, accordingly, held that valuation of closing stock shown at cost price was correct and deleted addition - Whether Tribunal was justified - Held, yes Section 37(4) of the Income-tax Act, 1961 - Guest house expenses - Assessment year 1986-87 - Whether an accommodation providing boarding and lodging to any person including any employee is to be treated as accommodation in nature of guest house and any expenditure incurred even on employee is to be treated as an expenditure on guest house disallowable under section 37(4) - Held, yes FACTS During the assessment year 1986-87, the Assessing Officer noticed that the assessee had not disclosed the value of certain number of bales of bagasses. The assessee explained that it was meant for initial fuel and not for sale and for the purposes of valuation, there was no further cost of bagasse in the hands of the assessee except for cost of wire used for baling and labour charges, which had been duly accounted for. However, the Assessing Officer held that the said bagasse was closing stock available with the assessee as a byproduct which had a market value. He, therefore, took market value of it and added to the income of the…

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