COMMISSIONER OF INCOME TAX, CALCUTTA vs BRITISH PAINTS INDIA LTD.

The Supreme Court held that under Section 145 of the Income Tax Act, 1961, the valuation of stock must adhere to the principle of valuing at cost or market value, whichever is lower. The Court found that the Income Tax Officer was justified in including overhead charges in the stock valuation, as the assessee's method of excluding such charges was not appropriate for determining true income. Consequently, the Court set aside the High Court's judgment that favored the assessee, affirming the Revenue's position on stock valuation.