| Case ID |
d4e319aa-ef82-4d1d-9527-9b92583dc09e |
| Body |
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| Case Number |
D-2741 of 2016 |
| Decision Date |
Jun 01, 2003 |
| Hearing Date |
May 01, 2003 |
| Decision |
The court ruled in favor of the assessee, Hela Holdings P. Ltd., allowing the change in the method of stock valuation from cost to cost or market value, whichever is lower. The court emphasized that the change was made honestly and with sufficient consistency, satisfying the requirements of Section 145 of the Income-tax Act, 1961. The Tribunal's earlier decision to deny the tax benefit was overturned, reiterating that the assessee's right to change its accounting method is legally recognized. The court highlighted the importance of distinguishing between tax avoidance and tax evasion, asserting that the former is permissible as long as it does not involve illegality or misrepresentation. |
| Summary |
This case revolves around the method of stock valuation adopted by Hela Holdings P. Ltd. for the assessment year 1995-96. The assessee initially valued its stocks based on the cost of acquisition but later changed to a valuation method that considered the lower of cost or market value, in line with accounting standards. The Assessing Officer disallowed the loss claimed due to this change, deeming it detrimental to revenue. However, the Commissioner of Income Tax (Appeals) reversed this decision, and the Tribunal upheld the disallowance. Upon appeal, the Calcutta High Court found that the change in accounting method was legally permissible, highlighting the distinction between tax avoidance and evasion. The court concluded that the change was made honestly, and the method was regularly employed, thus allowing the appeal. This case underscores the importance of proper accounting practices and the rights of taxpayers to adjust their methods in compliance with legal standards. |
| Court |
Calcutta High Court
|
| Entities Involved |
Commissioner of Income Tax,
Hela Holdings P. Ltd.
|
| Judges |
AJOY NATH RAY,
MS. INDIRA BANERJEE
|
| Lawyers |
N.K. Poddar,
R.K. Jaiswal,
P.K. Ghosh
|
| Petitioners |
Hela Holdings P. Ltd.
|
| Respondents |
Commissioner of Income Tax
|
| Citations |
2003 SLD 3826,
(2003) 263 ITR 129
|
| Other Citations |
Chainrup Sampatram v. CIT [1953] 24 ITR 481 (SC),
CIT v. British Paints India Ltd. [1991] 188 ITR 44/54 Taxman 499(SC),
Whimster & Co. v. IRC [1925] 12 TC 813,
CIT v. National & Grindlays Bank Ltd. [1984] 145 ITR 457/[1983] 13 Taxman 420 (Cal.),
Snow White Food Products Co. Ltd. v. CIT [1983] 141 ITR 847 (Cal.),
B.S.C. Footwear Ltd. v. Ridgway (Inspector of Taxes) [1972] 83 ITR 269 (HL),
McDowell & Co. Ltd. v. CTO [1985] 154 ITR 148/22 Taxman 11 (SC),
IRC v. Duke of Westminster [1936] AC 1,
W.T. Ramsay Ltd. v. IRC [1982] AC 300 (HL)
|
| Laws Involved |
Income-tax Act, 1961
|
| Sections |
145
|