Commissioner Of Income Tax 1 v. Sharad Mohanlal Shah

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL NO. 489 of 2018 ==========================================================COMMISSIONER OF INCOME TAX 1VersusSHARAD MOHANLAL SHAH ========================================================== Appearance: MR NIKUNT RAVAL FOR MRS KALPANA K RAVAL(1046) for the PETITIONER(s) No. 1MR TUSHAR HEMANI WITH MS VAIBHAVI K PARIKH(3238) for the RESPONDENT(s) No. 1 ========================================================== CORAM: HONOURABLE MR.JUSTICE AKIL KURESHIandHONOURABLE MR.JUSTICE UMESH TRIVEDI Date : 23/10/2018 ORAL ORDER (PER : HONOURABLE MR.JUSTICE AKIL KURESHI) 1.Revenue has challenged the order of the Income Tax Appellate Tribunal, Ahmedabad, dated 30.5.2017 raising the following question for our consideration. “Whether on the facts and circumstances of the case and in law, the Hon’ble Appellate Tribunal is justified in upholding the decision of the Ld. CIT(A) of approving the method of the assessee valuing the closing stock as per LIFO method even though the same method does not portray true picture of its business profit?” 2.The issue arises out of the assessment made for the Assessment Year 2010-2011. Assessee is in the business of manufacturing and selling of gold C/TAXAP/489/2018 ORDER ornaments. In the scrutiny assessment the Assessing Officer mainly question the valuation of the closing stock. According to the Assessing Officer, the assessee undervalued the stock which was below the average cost price of gold. The assessee pointed out that it follow the last in first out (for short “LIFO”) method of valuation. The Assessing Officer did not disturb the quantum of the gold at the time of closing but substituted the valuation, allowed to the assesseee average cost price and thereby disturbed the closing stock valuation. 3.The assessee carried the matter in appeal and the CIT(Appeal) noted the following such methods since several years. That even otherwise such method is recognised in law and the Assessing Officer ought not to have disturbed the same. 4.The Revenue filed an appeal before the Income Tax Appellate Tribunal, Ahmedabad, challenging the order of CIT(Appeal). The Tribunal dismissed the revenue appeal, upon which this appeal has been filed. 5.This Court had issued notice for considering the remand of the matter as was done by the Tribunal in case of the assessee for the Assessment Year 2007-2008. In response to such notice, Shri Tushar Hemani, learned counsel appeared for the respondent-assessee. He pointed out that the Tribunal orders for the Assessment Year 2007-2008 concerning two issues; one was the deployment of LIFO method for valuation of closing stock and the other was the portion declared by the assessee at the time of survey which remain unsold and which had come to the part of the closing stock adopted certain rate per gram of the gold. He pointed out that, insofar as applying LIFO method is concerned, the Tribunal had confirmed the view of the CIT(Appeal) and the remand was merely for the purpose of later issue. 6.We have perused the order of the Tribunal for the Assessment Year 2007-2008 and confirmed this position. It is therefore not necessary to remand the matter for proceedings. 7.The sole question arises in the present appeal is therefore confined to LIFO method. The CIT(Appeal) concurrently held that such method was already recognised in law and in any case consistently followed by CIT(Appeal) in several orders. The Tax Appeal is dismissed. (AKIL KURESHI, J) syed/ (UMESH TRIVEDI, J)