Delhi High Court
Commissioner Of Income Tax vs Maha Laxmi Sugar Mills Co. Ltd. on 10 January, 1985
JUDGMENT D.K. Kapur, J.
1. Though this application prays for reference of three questions, but we find that question No. 3 has already been referred by the Tribunal under s. 256(1) of the IT Act, 1961. The remaining two questions were not referred. As far as question No. 1 is concerned, it is the question whether the sole selling agency commission should be allowed as an expense. We agree with the Tribunal that this is a question of fact and, the Tribunal itself has allowed this commission on the basis that the same has been allowed for several earlier years. No question of law, therefore, arises.
2. As far as the second question, it is as to whether there was an under valuation of the closing stock. The facts given in the Tribunal's order show that the stock was valued at Rs. 135.55 per. qtl. because that was the effective rate from 1-7-1972, as per the Government of India Notification dt. 15-6-1972. On the other hand the rate on 30-6-1972, was at the rate of Rs. 145 per qtl. The closing stock was valued at cost or market price, whichever was lesser. It is urged by ld. counsel that the closing stock should have been valued at the market rate as on 30-6-1972. On the other hand, the method of making up of accounts is to carry the closing stock of one year into the next year as the opening stock. It so happens that the price of levy sugar, which is fixed by the Government, altered from Rs. 145 per qtl., on 30-6-1972 to Rs. 135.55 per qtl., on 1-7-1972. If the higher price was shown as the closing stock, it would be an over estimate for the following year. So, we agree that the Tribunal has correctly allowed the closing stock to be valued at Rs. 135.55 per qtl., because this stock could not have been sold at a price higher than Rs. 135.55 per qtl., after 30-6-1972. We would accordingly hold that neither question requires to be referred to this court and dismiss the application. No order as to costs.