Difference in ICAI and Income Tax Standard on "VALUATION OF INVENTORY"

Income Computation and Disclosure Standard II relating to valuation of  inventories 

Accounting Standards issued by ICAI	Income Computation and Disclosure Standards
VALUATION OF INVENTORY
AS-2 has not prescribed any method of valuation of inventories in the case of a service provider.	The costs of services in the case of a service provider shall consist of labour and other costs  of  personnel  directly  engaged  in  providing  the  service  including  supervisory personnel and attributable overheads.  [para 6]
B. Techniques for the measurement of the cost of the inventories
AS-2 stipulates that techniques such as the standard cost method or the retail method may be used if the results approximate to the actual cost.	Standard cost method not allowed. FIFO , average Cost Method and Retail Method Allowed [ Para no 16,18]
C. Opening inventories
Though the AS – 2 does not mention specifically about the treatment of opening inventory, yet the following treatment is generally accepted: a) The value of the inventory of a business as on the beginning of a previous year shall be the same as the value of inventory at the end of the immediately preceding previous year. b) It shall be nil if business has commenced during previous year	a) The value of the inventory of a business as on the beginning of a previous year shall be the same as the value of inventory at the end of the immediately preceding previous year. b) If business commenced during the previous year, it shall be cost of inventory available on day of commencement of business
D. Change in method of valuation
AS-2 read with AS-5 provides that the method of valuation of inventories may be changed if it is considered that the change would result in a more appropriate presentation.	The method of valuation of inventory once adopted by a person in any previous year shall not be changed without a reasonable cause.
E. Dissolution of partnership firm
-	Inventory on the date of dissolution of partnership firm or AOP or BOI, notwithstanding whether business is discontinued or not,  shall be valued at the net realizable value.[Para 24]
F. Transitional Provisions
-	Interest and other borrowing costs, which don't meet criteria for its recognition as a component of cost, but included in the cost of opening inventory as on 01-04-2015, shall be taken into account for determining cost of such inventory for valuation as on close of previous year beginning on or after 01-04-2015 if such inventory continue to remain part of inventory as on close of the previous year beginning on or after 01-04-2015 [Para 25].