A proceeds the market value at the date of their conversion into stockin-trade (since this would be the cost to the business) and not the original cost to the assessee. Here, the original cost of these rawmaterials and semi-finished needles to the a§_sessee was undoubtedly nil because these goods were received by the assessee from the West German Collabcrators free of cost, but they were introduced in the B business and converted into its stock on 3Qth September, 1961 and, therefore, their market value as on 30th September, 1961 would represent the cost to the business and that would have to be taken into account in de.termining the profit arising from the sale of the manufactured products. The entries made by the assessee in the books of account of the business on 30th September, 1961 clearly c reflected this opinion. The asscssee debited the sums of Rs. 44,448.20 and Rs. 30,000/-representing respectively the market value of these raw-materials and semi-finished needles to the stock accounts of "Wire and Strip" and "Semi-processed Needles" which would clearly show that these goods were treated by the assessee as having been introduc- D ed in the business a~ part of its stock at their market value represented by the sums of Rs. 44,448.20 and Rs. 30,000/-. The position was no different than what it would have been if, instead of giving these raw-materials •nd semi-finished needles to the assessee free of cost, the West German Collaborators had gifted the sums of Rs. 44,448.20 and Rs. 30,000/-to the assessee and the assessee had introduced these E amounts ii; the business and an identica_l quantity of raw malerials and semi-finished needles had been purchased for the business with these amounts. The cost of raw-materia_ls and semi-finished needles thus purchased would have been clearly liable to be deducted from the sale proceeds of the finished products manufactured out o[ them in' determining the profit of the business. Would the position then be different if instead, the West German Collaborators gave these rawmaterials and semi-finished needles to the assessee free of cost and the assessce introduced them in the business as part of its stock. We do not see any distinction in principle between these two types of cases and we are clearly of the view that the cost of these 1 aw-materials and semi-finished needles to the business represented by the sums of Rs. 44,448.ZO and Rs. 30,000/- debited in the respective accounts' of "Wire and Strip" and "Semi-Processed Needles" was liable Iv be deduc~ tcd from the sale proceeds of the finished products in arriving at the profit of the business. It is true that initialJy on 30\h September, 1961 the credit entries for the sums of Rs. 44,448.20 and Rs. 30,000/- v.·ere e. made in "Wire and Strip Gift Account" and "Semi-processed Needles Gift Account" respectively and it was only on the last date of the account year, namely, 31st March, 1962 that these amounts were trans-
