Law:

Section:

Section 145 of the Income-tax Act, 1961 - Method of accounting - Change of - Assessment year 1982-83 - Assessee claimed a deduction towards depreciation on depreciated value of investment, which, according to assessee, represented difference between book value and market value of securities - Whether since Tribunal had not considered factual issue as to mode adopted by assessee to value securities and also not decided question whether Commissioner was correct in his observation that assessee had neither adopted market value nor book value, matter had to be remitted back to Tribunal to consider afresh as allowability of entire amount of deficit claimed by assessee towards depreciation in value of its investments would depend upon correctness of method of valuation adopted in valuing its investments - Held, yes FACTS The assessee filed its return of income for the assessment year 1982-83. It enclosed along with the return a statement and claimed a deduction of Rs. 14,27,799 towards depreciation on the depreciated value of investment, which, according to the assessee, represented the difference between book value and market value of the securities. The Assessing Officer in the assessment granted the benefit of revenue deduction in respect of deficiency, which arose in the valuation of securities at market value, though the assessee had shown in its books of account the provision for a sum of Rs. 1 lakh only. The Commissioner in exercise of powers under section 263 set aside the order of the Assessing Officer on the ground that the same was erroneous and prejudicial to the interest of the revenue. The assessee preferred an appeal before the Tribunal as against the order of the Commissioner. The Tribunal set aside the order passed by the Commissioner under section 263 on the ground that provision for the entire claim was not made by the assessee due to non-availability of funds and it also held that the assessee was entitled to revenue deduction in respect of the said defi-ciency in the valuation of the securities. The Tribunal also held that the method of valuing the Government securities adopted by the assessee at market value or cost, whichever was lower, had all…

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