COMMISSIONER OF INCOME TAX Vs. MOPEDS INDIA LIMITED

JUDGEMENT

(1.) THIS reference concerns the income tax asst. year 1979 80. The Tribunal referred the following questions of law for consideration of this Court:

(2.) WE may dispose of the second question first, since it is represented that it is covered by the decision of this Court in favour of the assessee, viz., Addl. CIT vs. Akkamba Textiles Limited (1979) 117 ITR 294 (AP). Having regard to this representation, we answer the second question in the affirmative, i.e., in favour of the assessee and against the Revenue.

(3.) THE assessee objected to the direction of the CIT by filing an appeal before the Tribunal, and submitted that where, on an investigation and inquiry, the Revenue authorities are satisfied that the change in the method of valuation of closing stock is brought about for bona fide purposes, the Revenue has no right to interfere with the valuation of the closing stock. The assessee pointed out to the detailed enquiry made by the Commissioner and to the finding recorded by him that the change effected by the assessee was for bona fide purposes. It was also pointed out that the earlier system which was not at all scientific was replaced by the present system which is recognised as acceptable in commercial and accounting circles. In these circumstances, the assessee claims that the direction of the CIT to revalue the opening stock of the relevant year also on the "works cost" method is uncalled for.