Case Law Details
ACIT Vs PNB Gilts Ltd. (ITAT Delhi)
The issue under consideration is whether diminution or reduction in price of the stock-in-trade can be allowed while computing business income?
In the given case, the assessee, PNB Gilts Ltd is a Non-Banking Financial Company (NBFC), filed its return of income declaring total income. The return of income filed was selected for scrutiny assessment, which was completed under section 143(3) of the Income-tax Act, 1961 after making certain additions or disallowances. Aggrieved, the assessee filed an appeal before the CIT(A), who partly deleted the addition or disallowances which were made by the Assessing Officer. Aggrieved, the Revenue is in appeal before the Tribunal raised the ground that whether diminution or reduction in the price of the stock-in-trade can be allowed while computing business income.
As per ITAT, there is no dispute that the assessee is at liberty to value its stock at cost or market value, whichever is lower as per consistent method of accounting, and such reduction if any , in value of the shares held as stock-in trade will be allowed . But, if such a provision is made outside the trading account (only while computation of income) then same may not be allowable. In the facts of the case , it is not clear whether the provision for diminution in value of stock-in-trade has been made out of the trading account or within the trading account , therefore, ITAT feel it appropriate to restore the issue to the file of the Assessing Officer for verifying the facts from the books of accounts and other records of the assessee and decide the issue in dispute afresh in accordance with law. The ground of the appeal is accordingly allowed for statistical purpose.
FULL TEXT OF THE ITAT JUDGEMENT
Please become a Premium member. If you are already a Premium member, login here to access the full content.
Author Bio
