On appeal, the Tribunal held that, Valuing finished goods at cost or market value whichever is lower, was in accordance with the mandatory Accounting Standard (AS) – 2 and thus it could be said that change in method of valuing finished stock was bona fide.\u00a0 This would satisfy the mandate of S.\u00a0145A\u00a0of the Act. \u00a0Once, change of method is proven to be bonafide and genuine, then, if the changed method was applied to opening stock also, there would be taxing of the same income twice, hence, there was no need to apply the changed method to value the opening stock and it could be continued to be valued as per the old method. \u00a0If the assessee had to change the method of valuing inventory in compliance with AS 2, the changed method of valuation had to be applied to all the components of inventory as prescribed under AS 2.\u00a0 The assessee was directed to prove that these differential methods were consistent with AS 2 and there was no intent to reduce tax by applying the new method of valuing finished goods.<\/p>\n
\u00a0<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":" S. 145A : Accounting \u2014 Valuation of stock \u2014 Change in method \u2014 Assessee changing method of valuation – Cost or market value whichever is lower method \u2014 Changed method consistent with mandatory AS 2 \u2014 No need to apply changed method to opening stock of finished goods \u2014 Changed method valuation to be applied to all components of inventory<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-12539","post","type-post","status-publish","format-standard","hentry","category-income-tax-act"],"acf":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p9S2Rw-3gf","jetpack-related-posts":[],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/12539","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/comments?post=12539"}],"version-history":[{"count":2,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/12539\/revisions"}],"predecessor-version":[{"id":19272,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/12539\/revisions\/19272"}],"wp:attachment":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/media?parent=12539"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/categories?post=12539"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/tags?post=12539"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}