Section 15 : Allowances for cost of stock-in-trade:
1) For the purpose of computing the income earned by any person from any business in any year, any other allowances shall be allowed except the allowances for the cost computed pursuant to Sub-section (2) in respect of the disposal of the stocks-in-trade of the business of that person in that year.

2) The allowance for the cost referred to in Sub-section (1) shall be computed as follows by deducting the amount referred to in clause (b) from the amount referred to in clause (a):-

a) The amount to be set by adding the cost of the stock-in-trade derived from any business in any income year to the initial value of the stock-intrade of that business in that year,

b) The amount of final value of the stock-in-trade of any business in an income year referred to in clause (a).

3) The initial value of the stock-in-trade of any business in any income year shall be the final value of the stock-in-trade of that business at the end of last income year.

4) Whichever is lesser out of the following amounts shall be considered the final value of the stock-in-trade of that business of that income year:-

a) The cost of the stock-in-trade of that business at the end of that income year, or

b) The market value of the stock-in-trade of that business at the end of that income year.

5) In computing the cost of the stock-in-trade of a business, a person has to do as follows subject to Section 45 and Sub-section (6):-

a) In computing the income of a business, in the case of a person maintaining the accounts on the cash basis, by using the method of cost price or consumption cost, and

b) In computing the income of a business, in the case of a person maintaining the accounts on the accrual basis, by using the method of consumption cost.

6) If the stock-in-trade of business of any person cannot be determined, that person may choose to the first in first out method or average cost method to compute the cost of stock-in-trade.

Provided that, once such a method is selected, that method cannot be altered without written permission of the Department.

7) In computing the cost of stock-in-trade pursuant to Subsection (5), it has to be computed by the following method:-

a) In computing as per the consumption cost method, to so compute the cost of the stock-in-trade under the widely recognized accounting principle that it is equal to the sum total of direct material cost, direct labor cost and overhead cost of factory.

b) In computing as per the cost price method, to so compute the cost of the stock-in-trade under the widely recognized accounting principle that it is equal to the total sum of direct material cost, direct labor cost and alterable overhead cost of factory.

8) In computing the cost of stock-in-trade pursuant to Subsection (6), it has to be computed by the following method:-

a) In computing as per the average cost method, to compute on the basis of all weightage average costs of the stock-in-trade of the same type in the business under the widely recognized accounting principle.

b) In computing as per the first in first out method, to compute on the basis that the stock-in-trade received first is also disposed first, under the widely recognized accounting principle.

Explanation: For purposes of this Section,-

(a) "Direct labour cost" means the labor cost directly related with the production of the stock- in-trade.

(b) "Direct material cost" means the cost of materials which are or will be an integral part of the stock-intrade.

(c) "Overhead cost of factory" means the total cost incurred in producing stock-in-trade except the direct labor cost and direct material cost.

(d) "Alterable overhead cost of factory" means the overhead cost of factory that alters directly with a change in the produced quantity of stocks in-trade.