Commissioner Of Income Tax, Udaipur vs Hindustan Zinc Ltd on 18 May, 2007
30. The ratio laid down therein is that all cost including cost of raw material for the goods in process and finished goods should be included for the purposes of valuation of stock in trade. It reiterated that the closing stock should be valued either at the market price of the material or at the cost price of the raw material inclusive of all the expenditure incurred by the assessee on the said cost of the raw material. Therefore, even before the introduction of Section 145-A , it was laid down that the closing stock should be valued either at cost price or market price whichever is lower. The cost price includes all the taxes etc. paid by the assessee to bring the material at his place. The aforesaid decision has been referred in a subsequent decision in Commissioner of Income Tax, Udaipur versus Hindustan Zinc Ltd. (2007) 4 SCC 705 wherein the Supreme Court has held that an assessee has no right in writing down the value of goods in stock below the cost price by estimating its net revisable value. It has been held that if the fall in the price has the effect of merely reducing the prospective profits, there would be no justification to discard the valuation of cost.