- (1.) IN this reference, following questions of law are required to be answered: (I) Whether on the facts and in the circumstances of the case, the ITAT was right in upholding the addition of Rs.4,25,000/ - on account of valuation of shares in the closing stock on the basis of cost or market price whichever was lower?; and, (II) Whether, on the facts and in the circumstances of the case, the ITAT was right in upholding the levy of interest under Section 217(1A) of the Income Tax Act?
(2.) THE assessee company is a dealer in 'shares'. It was holding 4% non -cumulative preference shares as also equity shares of M/s Rockman Cycle Industries Private Limited. The shares were held by it as its stock -in -trade. The 'opening stock' of preference shares had been adopted on the basis of 'closing stock' for the preceding year wherein the valuation had been taken @ 10/ - per share. Earlier, the shares were being valued at cost price but in the assessment under consideration, the assessee had valued the shares at market or cost price whichever was lower. Since the market value of 4% non -cumulative preference shares was lower, the assessee had valued the same at Rs.4.25 lacs as against the value of Rs.8.5 lacs in the opening stock and thus had claimed a loss of Rs.4.25 lacs.
(3.) DISAGREEING with the assessee, the Assessing Officer (hereinafter called the AO) had treated the loss of Rs.4.25 lacs as fictitious and sequelly had made an addition of this amount in the total income of the assessee when the assessment was framed by him on 13.2.1989 vide order (Annexure A). In the appeal preferred by the assessee, addition of Rs.4.25 lacs in the income of the assessee was confirmed by the Commissioner of Income Tax (Appeals) (Central), Ludhiana [hereinafter called the CIT(A)] vide order (Annexure B) dated 21.11.1990. Feeling aggrieved, the assessee filed second appeal before the Income Tax Appellate Tribunal, Chandigarh Bench (hereinafter called the Tribunal) wherein also addition of Rs.4.25 lacs made by the AO and confirmed by the CIT(A), was further confirmed.;