PRABHULINGESHWAR SUGARS & CHEMICALS LIMITED Vs. THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2 AND ORS.

JUDGEMENT

(1.) HEARD the learned Senior Advocate Shri M.V. Sheshachala, appearing for the learned counsel for the appellant and Shri Y.V. Raviraj, appearing for the Revenue.

(2.) THE present appeal is filed under Section 260 -A of the Income Tax Act, 1961 (hereinafter referred to as 'the Act' for brevity), being aggrieved by the order of the Income Tax Appellate Tribunal, Panaji Bench, Panaji, in ITA No. 182/PNJ/2014 dated 07.07.2015 whereby the order passed by the Commissioner of Income Tax (Appeals) -VI, Bengaluru, dated 28.02.2014 was set aside and the order passed by the Assistant Commissioner of Income Tax Central Circle -2, dated 24.12.2012 was confirmed.

(3.) THE assessee in the course of manufacture of sugar extracts sugar from crushing sugar cane and the by -produces are molasses and bagasse. The assessee had declared 12119.550 metric tonnes of molasses valued at Rs. 4,01,78,529/ - as the closing stock, whereas, the closing stock of bagasse was declared as 19065.426 metric tonnes valued at Rs. 3,05,04,682/ -. It was the contention of the assessee that the legal position regarding valuation of closing stock was that same can be valued at the cost price or at the market price, whichever is lower. In view of the fact that bagasse and molasses are by -products of sugar extracted from sugar cane, the cost price of these two products can be ascertained only through the net realisable value. Hence, the cost price was ascertained by adopting the net realisable value and the same was worked out for the purpose of computation of closing stock.