Gopal Rao Ekbote, C.J. - (1.) The following two questions have been referred to us by the Income-tax Appellate Tribunal, Hyderabad. Whether on the facts and in the circumstances of the case, the method of revaluation of closing stock adopted by the Appellate Tribunal was a valid one ?
(2.) If the answer to question No. 1 is in the affirmative whether the relief in revaluation of stock should be restricted to the actual addition to the closing stock made by the Income-tax 'Officer or could exceed the same? 2. The assessee is a firm carrying on its business in mica mining. For the assessment year 1960-61 the closing stock valued by the assessee was found by the Income-tax Officer as incorrect. The closing stock consisted of three items, crude mica, cut mica and waste rounds. 'The assessee valued out mica and waste rounds at an average rate of Re. 1-01 per pound. At the close of the accounting year i.e., 31st March, 1960 the assessee's stock comprised of the following: Pounds 1. Crude mica 4,12,656 2. Cut mica including splittings 1,46,534
(3.) Waste rounds 1,98,648 The total quantity of crude mica processed in that year was 25,84,429 pounds. 3. The said crude mica when processed yielded during the year: Pounds Cut mica 249,398 Splittings 2,105 Waste rounds 5,33,085 TOTAL 7,84,588 The total processing cost was Rs. 4,42,465. The cost per pound thus came to 56 pies.;