[ASN] IN IN IN THE THE THE HIGH COURT OF JUDICATURE AT BOMBAY HIGH COURT OF JUDICATURE AT BOMBAY HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.192 of 2009 The Commissioner of Income Tax-6. ..Appellant. Vs. M/s. The Mahalaxmi Glass Works Pvt. Ltd. ..Respondent. Mr.J.S.Saluja for the Appellant. Mr.A.K. Jasani for the Respondent. CORAM : F.I. REBELLO & R.S. MOHITE, JJ. DATE : 1st April, 2009. PC : 1. The substantial question of law as raised in this appeal is as under. Whether on the facts and circumstances of the case and in law, the Hon’ble Tribunal was justified in confirming the order of CIT(A) whereby he directed to the Assessing Officer to make adjustment of unutilized MODVAT Credit to the opening stock and thus ignoring the ratio laid down in Melmould Corporation Vs. CIT (202 ITR 789) Bombay wherein it was held that changing the value of opening stock will lead to chain reaction and hence the same should not be done? [ 2 ] 2. This question has been dealt with and answered by the Delhi High Court in the case of Commissioner of Commissioner of Commissioner of Income Income Income Tax Vs. Mahavir Alluminium Ltd. reported in Tax Vs. Mahavir Alluminium Ltd. reported in Tax Vs. Mahavir Alluminium Ltd. reported in (2008) (2008) (2008) 297 297 297 ITR 77 (Delhi). ITR 77 (Delhi). ITR 77 (Delhi). This question concerns the method of valuation of inventory as contemplated by Section 145A of the Income Tax Act. In the case before the Delhi High Court, the Assessing Officer contended that Section 145A did not permit the assessee to make a change in the valuation of the opening stock as on 1.4.1998 though it permitted a change in the closing stock as on 31.3.1999. The question before the Delhi High Court was that the adjustment of excise duty could be made in the opening stock also. In this connection, relying upon the decision of Privy Council in the case of CIT Vs. CIT Vs. CIT Vs. Ahmedabad Ahmedabad Ahmedabad New Cotton Mills Co. Ltd. reported in AIR New Cotton Mills Co. Ltd. reported in AIR New Cotton Mills Co. Ltd. reported in AIR 1930 1930 1930 PC 56, PC 56, PC 56, the Delhi High Court took a view that to give effect to Section 145A, if there is any change in the closing stock at the end of the year then there must necessarily be a corresponding adjustment made in the opening stock of that year. It has been held that this would not amount to give double benefit to the assessee and would be necessary to compute the true and correct profit for the purpose of assessment. [ 3 ] 3. We may reproduce here, the relevant observation in the judgment of the Privy Council in the case of CIT Vs. Ahmedabad New Cotton Mills Co. Ltd. which was relied upon by the Delhi High Court and which is as under. "If "If "If the the the method of altering both valuation is not method of altering both valuation is not method of altering both valuation is not adopted adopted adopted it is perfectly plain that the profit it is perfectly plain that the profit it is perfectly plain that the profit which which which is brought forward is not the real one. is brought forward is not the real one. is brought forward is not the real one. ItItIt may be more or it may be less, but it has no may be more or it may be less, but it has no may be more or it may be less, but it has no relation relation relation to the true profit if the stock is to the true profit if the stock is to the true profit if the stock is valued valued valued on one basis when it goes out without on one basis when it goes out without on one basis when it goes out without considering considering considering the the the value of the stock when it comes value of the stock when it comes value of the stock when it comes in. in. in. When, therefore, there is under valuation When, therefore, there is under valuation When, therefore, there is under valuation atatat one end, the effect is to cause both a one end, the effect is to cause both a one end, the effect is to cause both a smaller smaller smaller debit in respect of the stock introduced debit in respect of the stock introduced debit in respect of the stock introduced into into into the next account and a larger sum for the next account and a larger sum for the next account and a larger sum for profits profits profits realised by the sale, change in market realised by the sale, change in market realised by the sale, change in market value value value being immediately reflected in the price being immediately reflected in the price being immediately reflected in the price obtained obtained obtained for the goods that are sold; in these for the goods that are sold; in these for the goods that are sold; in these circumstances circumstances circumstances to contend that there should be to contend that there should be to contend that there should be under under under valuation at one end and not at the other valuation at one end and not at the other valuation at one end and not at the other isisis to raise an argument which their Lordships to raise an argument which their Lordships to raise an argument which their Lordships cannot cannot cannot accept". accept". accept". [ 4 ] 4. We are in respectful agreement with the reasoning and the finding given by the Delhi High Court. 5. Apart from this , we find from the judgment of the ITAT that when counsel for the assessee contended that the closing stock of the previous year be taken as opening stock of the next year and that the Assessing Officer be directed to establish the valuation for closing stock as opening stock of the next year, the D.R. stated that he has no objection for the same. This concession has been recorded in the order. 6. In this view of the matter, we are of the opinion that the question of law as raised by the appellant does not arise. Accordingly, the appeal is summarily dismissed. ( R.S. MOHITE, J.) ( F.I.REBELLO, J.)