The taxpayer, which for corporate purposes had been using the F.I.F.O. method for determining the cost of its sales of manufactured metals and its closing inventories, in 1946 and 1947 switched to the L.I.F.O. method for income tax purposes. The Minister reassessed on the basis that its taxable income for its 1947 year should be determined on the basis of applying the F.I.F.O. method.
Viscount Simonds effectively affirmed the Minister's reassessment in the absence of evidence that the L.I.F.O. method more closely approximated the actual pattern of physical usage of purchased metals by the taxpayer than the F.I.F.O. method (p. 1225):
"There is no room for theories as to flow of costs: nor is it legitimate to regard the closing inventory as an unabsorbed residue of cost rather than as a concrete stock of metals awaiting the day of process. It is in their Lordships' opinion the failure to observe, or, perhaps it should be said, the deliberate disregard of, facts which can be ascertained and must have their proper weight ascribed to them, which vitiates the application of the L.I.F.O. method to the present case. It is the same consideration which makes it clear that the evidence of expert witnesses, that the L.I.F.O. method is a generally acceptable, and in this case the most appropriate, method of accountancy, is not conclusive of the question that the Court has to decide."