METTUR SPINNING MILLS Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) AT the instance of the assessee relating to its assessment year 1980-81, the following two questions have been referred to us for our decision :

(2.) IN so far as the first question of law is concerned, the Tribunal has held that the Commissioner of INcome-tax, has found as a fact that in the asses-see's case, the partners, at the time of dissolution of the firm, have actually revalued the closing stock at market price and credited the same in the accounts of the partners. The contention raised by the assessee that the valuation of the stock should be done at the book value was not found acceptable either by the INcome-tax Officer or by the Commissioner of INcome-tax in the appeal. The Appellate Tribunal also rejected the contention urged on behalf of the assessee and held that the valuation of the closing stock should be done on the market value. The Supreme Court in the case of A L. A. Firm v. CTT [1991] 189 ITR 285, held that the proper practice is to value the closing stock at market value and that will eliminate entries relating to the same stock from both sides of the account. The view of the Tribunal is in accordance with the law laid down by the Supreme Court in A. L A. Firm's case [1991] 189 ITR 285. Accordingly, we answer the first question referred to us in favour of the Revenue and against the assessee.