COMMISSIONER OF INCOME-TAX Vs. HARYANA MINERALS LTD

JUDGEMENT

(1.) This is an application by the CIT, Haryana, Rohtak, filed under s. 256 (2) of the IT Act, 1961, seeking a direction to the Income-tax Appellate Tribunal, Chandigarh Bench (the Tribunal), to refer the following question of law to this Court for its opinion :

(2.) Assessee was an undertaking of the State Government of Haryana and carried on the work of mining and manufacturing of marble and slate stones. The assessee showed value of the closing stock at Rs. 17,59,071. 53 in the original return filed for the asst. yr. 1981-82. The value of the closing stock was, however, reduced to Rs. 9,45,973. 24 in the revised return on the ground that valuation was required to be made on the cost price instead of market price. The AO did not accept the revised valuation of the closing stock and made addition of Rs. 8,13,090. The CIT (a in assessee's appeal accepted the assessee's plea and so did the Tribunal in the Revenue's appeal filed against the order of the CIT (A ).

(3.) Shri R. P. Sawhney, learned senior advocate for the Revenue, has argued on the basis of the decision of the Supreme Court in CIT vs. British Paints India Ltd. (1991) 188 ITR 44 (SC) : Tc 2r. 113, that if the assessee did not adopt correct mode of valuation of the stock, the AO was empowered to make the correct valuation. That was a case where the assessee, while valuing the closing stock, had not taken into account the overhead charges and only actual cost of the raw materials was shown. This was not approved.