2004 TAX. L. R. 188 ::(2004) 2 Bom CR 641 ::(2004) 266 ITR 418 ::(2003) 133 Taxman 740 ::(2004) 178 Taxation 11

Bombay High Court

Hon'ble Judge(s): V. C. Daga, J. P. Devadhar , JJ

(A) Income-tax Act (43 of 1961) , S.143, S.145— Assessment - Addition made to Closing Stock - Valuation of obsolete items at 10% of cost supported by Certified Auditor's Report - Additional to Closing Stock by taking relisable value of obsolete items at 50% of the cost - Is invalid. In the instant case, the assessee is a public limited Company engaged in the business of manufacture, designing and commissioning of complete plants for dairy and food processing industry. In the assessment Year in question, the assessees had written off a sum of Rs. 28.00.000/- under the head manufacturing and other expenses. The assessee explained that the write-off is mainly on account of obsolete items which were not moving for the last 3 years, in view of the change in designs or specifications due to its technological operation. Accordingly, the assessee had valued the closing stock of obsolete items at 10% of the cost. The assessing Officer held that the assessee has neither furnished the list of obsolete items nor produced any records to show that the items were not moving. The A. O. took the relisable value of obsolete items at 50% of the cost and accordingly added back Rs. 15,15, 656/-. Held, that, addition made to the closing stock was invalid. There is no dispute that the duly Certified Auditor's report placed before the A. O. clearly justified valuat....