COMMISSIONER OF INCOME TAX Vs. ANDHRA PRABHA LIMITED

JUDGEMENT

(1.) IN pursuance of the direction given by this court on March 7, 1983, the Tribunal referred the following two questions for the opinion of this court under Section 256(2) of the INcome-tax Act, 1961 (hereinafter referred to as the "Act") :

(2.) THE assessee is a company engaged in the business of printing and publishing newspapers. In arriving at the value of the closing stock of metal and types, the assessee used to estimate the value of such metal and types on an ad hoc basis. Since the assessee used a special type of alloy for making types for printing and the alloy so received in the press room could not be easily quantified or evaluated, the assessee chose to change its method of valuation from the previous year, relevant to the assessment year 1975-76 onwards so as to exclude the value of such alloy in the press room from the valuation. According to the assessee, the issue of such metal from the store room to the press room was treated as consumption on the ground that the alloy had no other commercial use and had also a short life. However, the Income-tax Officer did not accept this change and accordingly he valued the alloy as furnished by the assessee at Rs. 2,54,705 and added it to the total income.

(3.) IN CIT v. Carborandum Universal Ltd., 1984 149 ITR 759, this court, while considering the valuation of stock, method of valuation and change in the method of valuing closing stock from the total cost to direct cost, held thus (page 770) :