SIR KIKABHAI PREMCHAND vs COMMISSIONER OF INCOME TAX (CENTRAL),BOMBAY.

The Supreme Court held that under the Indian Income-tax Act, 1922, Section 13, an assessee using the mercantile system of accounting is entitled to value stock at cost price rather than market price when withdrawing stock from business. The court ruled that the assessee was not required to credit the business with the market price of the assets withdrawn, affirming the method of valuation adopted by the assessee. The dissenting opinion argued for the necessity of crediting the market value at the time of withdrawal.