NORTH ARCOT DISTRICT CO OPERATIVE SUPPLY AND MARKETING SOCIETY LIMITED Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) AT the instance of the assessee, the Income-tax Appellate Tribunal, Madras, has stated a case and referred the following question of law under section 256(1) of the Income-tax Act, 1961.

(2.) THE assessee is a co-operative and marketing society and the assessment year concerning the tax case reference is the assessment year 1971-72 and the relevant accounting year is the year ending with June 30, 1970. In computing its income for the said assessment year 1971-72, the Income-tax Officer made the following addition towards the reserve for deficit stock of Rs. 1,87,544. THE Income-tax Officer disallowed the same for the reasons stated in the earlier assessment years. THE case of the assessee before the Income-tax Officer was that the stocks were damaged and since they would not be sold normally, the reserve was created and the reserve made for the deficit stocks should be allowed as deduction. According to the assessee, the reserve represented estimated value for the damaged stock and the estimated value called for adjustment in the computation of the income under the Income-tax Act, 1961. THE Income-tax Officer found that the value of the goods had not been written off in the books of account of the assessee and hence disallowed the claim.

(3.) IN this view of the matter, we answer the question of law referred to us in the affirmative and against the assessee. But, however, there will be no order as to costs.