Court held that Parliament, after a wide range of consultation from all stakeholders and based on the recommendations of the committee to maintain uniformity in accounting the income and valuing stock, made clause 16 of the Income Computation and Disclosure Standards (II) mandatory for the adoption of the first-in-first-out or weighted average cost method. This mandatory provision applies to all assessees, and, therefore, making clause 16 of the Income Computation and Disclosure Standards (II) mandatory for adopting the first-in-first-out or the weighted average cost method as the only method for valuing the stock and inventory does not suffer from the vice of unreasonable classification or manifest arbitrariness as violative of article 14 of the Constitution of India. Court also held that,

 an assessee is entitled to adopt one or the other method of computation of its income if a particular method has not been made mandatory. The assessee was applying the last-in-first-out method of accounting as the standard for valuing the closing and opening stock up to April 1, 2017. Before April 1, 2017, there was no mandatory provision for adopting one or another method of Accounting Standards. The statute also did not mandate only one method of valuing the closing and opening stock. The assessee was free to adopt any one of the Accounting Standards as notified by the Institute of Chartered Accountants of India. By applying the method of first-in-first-out with effect from April 1, 2017, the income of the assessee had increased to the tune of Rs. 51.07 crores without any real income. Therefore, the stipulation under clause 16 of the Income Computation and Disclosure Standards (II) for the adoption of the first-in-first-out or weighted average cost for valuation of stock and inventory could not be applied in the assessment year 2017-2018 for the valuation of the opening stock, as the opening and closing stock of the year were to be valued by applying the same methodology. The Department was to either accept the valuation of both opening and closing stock, for the assessment year 2017-2018, based on the last-in-first-out method or permit the assessee to value his stocks by applying the first-in-first-out or weighted average cost method.(AY. 2017-18)