Law: Income Tax Act, 1961

Section: 145,256

(a) Income-tax-----Reference---Valuation of stock---Change in method of valuation---Finding by Tribunal, that method adopted, by assessee was a recognised and scientific method---Tribunal justified in allowing change---No question of law arose--¬Indian Income Tax Act, 1961, Ss. 145 & 256. (b) Income-tax--- ----Reference---Question decided by Supreme Court cannot be referred--¬Business expenditure---Decision of Supreme Court in Addl. CIT v. Akkamamba Textiles Ltd. (1997) 227 ITR 464 that guarantee commission paid to Bank is deductible---Question whether guarantee commission is deductible cannot be referred---Indian Income Tax Act, 1961, Ss.37 & 256. (c) Income-tax--- ----Reference---Business expenditure --- Disallowance --- Travel --- Expen4iture on travel by employees in a year whether should be aggregated for purposes of R.6-D---Question of law---Indian Income Tax Act, 1961, Ss.37 & 256--¬Indian Income-tax Rules, 1962, R.6-D. Section 145 of the Income Tax Act, 1961, as it stood at the relevant time, provided that income chargeable under the head "Profits and gains of business or profession" or "income from other sources" shall be computed in accordance with the method of accounting regularly employed by the assessee. Where the Assessing Officer was satisfied about the correctness or the completeness of the accounts but was of the opinion that the method employed did not permit the income being properly deduced therefrom, then the computation of income could be made on such basis and in such manner as he may determine. A taxpayer is free to employ, for the purpose of his trade, his own method of keeping accounts and for that purpose to value his stock-in-trade either at cost or at market price. A method of accounting adopted by the trader consistently and regularly cannot be discarded by the Departmental authorities on the view that he should have adopted a different method of keeping accounts or of valuation. The method of accounting regularly employed may be discarded only if in the opinion of the taxing authorities income of the trade cannot be properly deduced therefrom. Valuation of the stock at cost is one of the recognised methods. Whether…

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