S. 145: Excise duty need not be included in closing stock

CIT vs. Dynavision Limited (Supreme Court)

The assessee valued its closing stock without including excise duty. The AO held that excise duty had to be included in the closing stock though the CIT(A), Tribunal and High Court (267 ITR 600 (Mad)) upheld the assessee’s plea on the basis (following English Electric Co. 243 ITR 512 (Mad)) that the inclusion of excise duty in the valuation of closing stock was permissible only if the liability for that amount in the excise duty account was given a deduction and otherwise it would be anomalous. On appeal by the department to the Supreme Court, HELD dismissing the appeal: