COMMISSIONER OF INCOME TAX Vs. SOHAN LAL DECD

JUDGEMENT

(1.) THESE references were made at the instance of the Revenue under S. 256(1) of the IT Act, 1961 (hereinafter referred to as 'the Act') by the Income tax Appellate Tribunal, Delhi Bench 'B', New Delhi (hereinafter referred to as 'the Tribunal'), for opinion of this Court on the following questions :

(2.) THE contention of the assessee that the said amount be treated to be a loss was accepted by the AO inter alia on the ground that when the assessee transferred the shares from investment account to stock in trade account, such transfers would have been assessed at the market value on the date of transfer. The AO for coming to the said conclusion relied upon a decision of the apex Court in CIT vs. Bai Shirinbai K. Kooka (1962) 46 ITR 86 (SC) : TC 14R.129.

(3.) THE Tribunal held that the principles laid down by the apex Court in Bai Shirinbai K. Kooka's case (supra) would not apply as therein the shares had been valued from year to year for a long period on cost basis and the trading results had been worked out on that basis, which had been accepted. The Tribunal observed that from the point of view of accountancy where a consistent method is adopted and the valuation of stock is done in a regular manner, the variation adopted by the Income tax Officer (in short, 'ITO') would not be justified. Referring to the decision of the apex Court in the case of Investments Ltd. vs. CIT (1970) 77 ITR 533 (SC) : TC 14R.373, the Tribunal observed that the income of the business be properly deduced from the manner in which the assessee was valuing his stocks from year to year and, therefore, no adjustment was required to be made to the trading results shown. It was further observed that it was competent to change the value of opening stock and the value of closing stock of the shares.