The assessee prepared his accounts in compliance with AS-2 “Valuation of Inventories” issued by the ICAI. According to the Guidance Note on Tax Audit under s. 44AB issued by the ICAI, S. 145A provides that the valuation of purchases and sales of goods and inventory for the purpose of computation of income from business or profession shall be made on the basis of the method of accounting regularly employed by the assessee subject to certain adjustments. It is not necessary to change the method of valuation of purchases, sales and inventory regularly employed in the books of account. The adjustments provided in this section can be made while computing the income for the purpose of preparing the return of income. (AY. 2017-18)
Arunkumar Puthige v. ITO (2024) 232 TTJ 342 / 243 DTR 350 / 38 NYPTTJ 1284 (Cochin)(Trib)
S. 145A : Method of accounting in certain cases-Valuation of closing stock-Valuation of Inventories-If the AO add VAT to the closing stock value, then necessarily he has to add VAT amount in the opening stock value also and in that circumstances the net effect will be neutral-Addition of VAT amount to the closing stock value is not sustainable. [S.44AB]
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