IN THE HIGH COURT OF DELHI AT NEW DELHI 
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  29.01.2009 
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 Present:       Mr. R. D. Jolly, Advocate for the Appellant. 
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 + ITA No. 16/2009 
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 Two questions A and B have been proposed. 
 So far as the second proposed question is concerned, it stands covered 
 against the revenue by virtue of the decision of this Court in Commissioner of 
 Income Tax vs. Woodward Governor India P. Ltd., (2007) 294 ITR 451 (Delhi). 
 In regard to the first question, the AO has observed that the assessee 
 was following a different method for valuing inventory upto the last year. The 
 assessee has changed the method of valuation of inventory, which has resulted in 
 the inventory being shown at a lower value. It is not in dispute that the change 
 is a result of the recommendation of the Institute of Chartered Accountants of 
 India and in consonance with accounting standard-2 (AS-2) on ?Valuation of 
 inventories?. 
 We do not go further than the decision of CIT, Tamil Nadu v. Carborundum 
 Universal Ltd (1984) 149 ITR 759 (Mad) against which a Special Leave Petition 
 was preferred which was dismissed. In the said case of Carborundum Universal Ltd 
 (supra), the Division Bench of Madras High Court observed as follows: 
 ?merely because the new method adopted by the assessee was detrimental to  the 
 Revenue, that alone  can  never  be   the   basis  for  denying  the   right  to 
 change  the  method.  Further, even though the change of the method has resulted 
 in a detriment  to  the  Revenue  in  the year in question, since the 
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 ITA No. 16/2009                                                 Page 1 of 2 
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 method is to be followed consistently year after year in future, this apparent 
 detriment to the Revenue will get adjusted and disappear  . Therefore, in view 
 of the findings of the Tribunal that the change of the method is bona fide and 
 is intended to be followed in future, year after year, the change has to be 
 accepted by the Revenue, notwithstanding the fact that during assessment year 
 which is the first year when change of method is brought about it has resulted 
 in a prejudice or detriment to the Revenue. So long as the method of valuation 
 adopted by the assessee gets recognition from the practicing accountants and the 
 commercial world for valuation of stock-in-trade, the adoption of that method 
 cannot be questioned by the Revenue unless the adoption of that method is found 
 to be not bona fide or restricted for a particular year.? 
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 We are in respectful agreement with the aforementioned decision of the 
 Madras High Court. 
 The tribunal affirmed the order of the CIT (A) and has observed that the 
 choice of the method of valuation of inventories rests with the assessee. 
 Furthermore, it has been followed consistently by the assessee in subsequent 
 year. 
 No substantial question of law arises for our consideration. 
 The appeal is dismissed. 
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 VIKRAMAJIT SEN, J. 
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 RAJIV SHAKDHER, J. 
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 JANUARY 29, 2009 
 Rb 
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 ITA No. 16/2009                                                 page 2 of 2 
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