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Valuation of stock

vijendra (article trainee) (230 Points)

05 March 2014

dear sir/madam

kindly help me by suggesting supreme court decision/case on stock declared to bank for OD is not final for determination of profit or for considering as income for tax by department. asap.

thanks n regards

vijendra

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Amit Kumar (Chief Accounts Officer) (183 Points)
Replied 05 March 2014

stock declared by firms for OD purpose is normally false, as the reason behind it is that if stock is less than 80% margin than OD limit may be cancelled or limit may be reduced, so its the practice to show stock @ 80% margin. in a bank stock statement varification when i visited to a client then i found only rs 600000 stock(Bardana) as against 1.2 crores shown in stock statement.