1991 (11) TMI 113

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....eturned income of the assessee for the asst. yr. 1983-84. 2. In the first seven grounds the assessee, a partnership firm deriving income from selling radio parts and components, is aggrieved against a trading addition of Rs. 20,600. The relevant facts are that on scrutiny of the accounts of the assessee the ITO noted that goods worth Rs. 2,86,206 had been sold by the assessee to one of its part....

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.... since no income arose to the assessee as a result of transfer of its goods to one of its retiring partner at cost, none was taxable in its hands (vide Sir Kikabhai Prem Chand vs. CIT (1953) 24 ITR 506 (SC)). It was pointed out that at one stage the ITO had even refused registration to the assessee firm doubting the retirement of the partners from the partnership under the partnership deed dt.10th....

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....owed by the CIT(A), it was submitted that the stock-in-trade on dissolution of firm was required to be valued as per market rates and since that was not done in this case, the ITO was justified in making the impugned addition. 5. After having given our thoughtful consideration to the submissions advanced before us we are of the opinion that it is difficult to sustain CIT(A)'s order on the point....

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....Co. Ltd's case, the well established fact remains that these did not, either directly or indirectly, earn any profit in the transaction. This conclusion is strengthened by the fact that the ITO brought on record neither the cost value nor market value of the goods sold. There is in fact no basis of his estimating the profit of the assessee at Rs. 20,600. In view of this specific lacuna of absence ....