Law:

Section:

â- Section 145 of the Income-tax Act, 1961 - Method of accounting - Valuation of stock - Assessment year 1982-83 - Assessee-company dealing in tanning of raw hides, had closing stock of 17408 hides at end of accounting year relev-ant to assessment year 1982-83 - Said hides were in process of tanning and certain material had also been spent on their tanning which amounted to work-in-progress - Assessee had valued material used at Rs. 3 per hide only i.e., Rs. 52,224 (3×17408) - IAC observing that most of hides included in 17408 were at finishing stages and, therefore, value of tanning material used on them was much higher than that estimated by assessee, held that material could be valued at Rs. 55 per hide i.e., 9,57,440 and accordingly made addition - Tribunal on finding that there was opening stock of 17238 hides (i.e., closing stock of assessment year 1981-82) and if there was no extra material to be added for 17238 hides, there would remain only 170 (17408-17238) hides in process, increased value of tanning charges/material used in respect of 170 hides only - Whether value of closing stock for earlier assessment year 1981-82 would be valued of opening stock for assessment year 1982-83 and any change in valuation of closing stock of assessment year 1982-83 would have no effect on value of opening stock of year 1982-83 - Held, yes - Whether, therefore, Tribunal was not justified in valuing tanning charges only in respect of 170 hides and making adjustment of 17238 hides being opening stock of year in question - Held, yes FACTS The assessee-company was dealing in tanning of raw hides. At the end of the accounting period, the assessee had 17408 hides lying in the tanning yard, which were in process of tanning. Certain materials had also been spent on their tanning, which amounted to work-in-progress shown by the assessee at Rs. 3 per hide only. The IAC held that most of the hides were included in 17408 at the finishing stages and, therefore, value of tanning material used on them was much higher than that estimated by assessee and, accordingly, made addition. The Commissioner (Appeals) took the valuation of material used in the tanning of hides at Rs. 15…

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