Law: Income Tax Act, 1961

Section: 37,40,40(a)(ii),80,80J,254,256

(a) Income tax Business loss Valuation of stock Change in method of valuation -Change is permissible if it is bona fide and followed regularly thereafter -Valuation of slow moving items at realisable value Finding that change was bona fide and followed regularly thereafter Change in method was justified Loss on revaluation of stock was deductible Indian Income Tax Act, 1961. An assessee is free to adopt a particular method of valuation, of its closing stock which it has to follow regularly from year to year. At the same time it is well settled that irrespective of the basis adopted for valuation for earlier year, the assessee has an option to change the method of valuation of closing stock, provided the change is bona fide. and followed regularly thereafter. The Appellate Tribunal being the final fact finding authority under the Act, the High Court in the exercise of its advisory jurisdiction can neither go behind the facts stated by the Tribunal nor can disturb the same unless a challenge is provided specifically by a question framed in a reference against the validity of the impugned findings of fact on the ground that there is no evidence to support them or they are result of a misdirection in law. Held, that, in view of the findings of the Tribunal, the assessee had resorted to revaluation of the raw materials on the basis of specific instances of fall in value of the goods when such goods could not be sold even at cost price, there was nothing wrong in valuing the goods at an estimated realisable value. The assessee has an option to change the method of valuation of closing stock if the change is bona fide and followed regularly thereafter. The loss arising out of revaluation of closing stock was allowable. (b) Income tax Reference Finding of fact Final unless challenged specifically Indian Income Tax Act, 1956, S.256. (c) Income tax Business expenditure Reference Appeal to Appellate Tribunal -Surtax Supreme Court decision that surtax is not deductible Question whether Tribunal was justified in rejecting additional ground that surtax was deductible was academic High Court would not answer it Indian Income Tax Act, 1961, Ss.37, 254 & 256. That in Smith…

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