Inventory valuation caught in the web of ICDS, IndAS and settled jurisprudence!
Valuation of inventory is not supposed to give rise to any income and therefore the same should be at lower of cost or market value. However, with changing accounting and tax regulations, the old age principles need to be revisited. Section 5(1) of the Income-tax Act, 1961 (‘the IT Act’) provides that the total income of a person would include all sums that inter alia accrue or arise to him. The Central Government recent notified 10 Income Computation and Disclosure Standards (ICDS ), effective financial year 2016-17. One such standard, ICDS-II, relates to method to be adopted for determining the value of stock in trade of any business (‘inventories’) and has raised a few issues as regards valuation on succession, valuation of closing stock in services...
- An EPC contractor supplying goods and services cannot be compared with service providers alone – ITAT, Delhi
- AO should pass a draft order in the case of an eligible assessee even in case of assessment pursuant to remand - Delhi High Court
- Income from letting of building with amenities taxable as income from other sources –Write off of a sum without specific waiver of liability cannot be treated as a bad debt - Delhi High Court
- Directors should be issued notice before proceeding for recovery of dues of the company – Gujarat High Court
CBDT issues draft notification on furnishing estimation of income and tax liability in for assessments covered under Section 44AB