Punjab-Haryana High Court
Commissioner Of Income-Tax vs Haryana Minerals Ltd. on 23 December, 1998
Equivalent citations: [2000]242ITR704(P&H)
Author: N.K. Agarwal
Bench: N.K. Agarwal
JUDGMENT N.K. Agrawal, J.
1. This is an application by the CIT, Haryana, Rohtak, filed under s. 256(2) of the IT Act, 1961, seeking a direction to the Income-tax Appellate Tribunal, Chandigarh Bench (the Tribunal), to refer the following question of law to this Court for its opinion :
"Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in deleting the addition of Rs. 8,13,090 made by the AO on account of undervaluation of closing stock by changing the method of valuation by the assessee ?"
2. Assessee was an undertaking of the State Government of Haryana and carried on the work of mining and manufacturing of marble and slate stones. The assessee showed value of the closing stock at Rs. 17,59,071.53 in the original return filed for the asst. yr. 1981-82. The value of the closing stock was, however, reduced to Rs. 9,45,973.24 in the revised return on the ground that valuation was required to be made on the cost price instead of market price. The AO did not accept the revised valuation of the closing stock and made addition of Rs. 8,13,090. The CIT(A in assessee's appeal accepted the assessee's plea and so did the Tribunal in the Revenue's appeal filed against the order of the CIT(A).
3. Shri R. P. Sawhney, learned senior advocate for the Revenue, has argued on the basis of the decision of the Supreme Court in CIT vs. British Paints India Ltd. (1991) 188 ITR 44 (SC) : TC 2R.113, that if the assessee did not adopt correct mode of valuation of the stock, the AO was empowered to make the correct valuation. That was a case where the assessee, while valuing the closing stock, had not taken into account the overhead charges and only actual cost of the raw materials was shown. This was not approved.
4. On a consideration of the facts of the case decided by the Supreme Court in British Paints India Ltd. (supra), it is noticed that the assessee had, in that case, omitted to show the overhead charges and had simply shown the cost of the raw materials. Therefore, the aforesaid decision does not help the Revenue. In the present case, the assessee changed the mode of valuation on the ground that the cost price was lower than the market price and, therefore, the change in the method of valuation was claimed to be bona fide.
5. Learned counsel for the respondent-assessee has, on the other hand, argued that change in the method of valuation of the closing stock was rightly allowed by the CIT(A) as well as the Tribunal, because it was found to be bona fide and was also regularly employed by the assessee in subsequent years. The plea taken by the AO that the change in the method of valuation of the closing stock was detrimental to the interests of the Revenue is not relevant and valid.
6. The Tribunal, in its appellate order, has observed as under :
"Therefore, since on facts the change in the method of valuation of the closing stock was bona fide and the same was followed in subsequent years, we find no warrant or justification for any interference with the orders of the learned CIT(A)."
Since the Tribunal has, on appreciation of evidence, arrived at a finding of fact, the question sought to be referred is not a referable question of law.
7. The application is, therefore, dismissed.