SAKTHI TRADING CO. vs C.I.T., COIMBATORE

The Supreme Court addressed the issue of stock valuation under Section 263 of the Income Tax Act, 1961, in the context of a firm's dissolution and subsequent reconstitution. The Court held that when a business continues without discontinuance, the Income Tax Officer cannot substitute market value for the closing stock determined under the regular accounting method. The Court upheld the Tribunal's decision that there was no necessity for revaluation of stock in a continuing business, affirming the assessment order made by the Income Tax Officer.