1984 (3) TMI 165

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....ates to the assessment year 1980-81. 2. The ITO originally made an assessment on 18-11-1980 on the entire income of the firm from 1-11-1978 to 20-10-1979. One of the partners had died on 25-8-1979 and the assessee had pleaded that two separate assessments should be made which was eventually upheld in appeal and, consequently, the ITO made a revised assessment for the period 1-11-1978 to 25-8-19....

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....cent works out to Rs. 25,100 Rs. 25,100 Closing stock of handloom cloth is Rs. 32,358 and gross profit at 12.9 per cent works out to Rs. 4,165 4,165 Closing stock of banians is Rs. 12,756 and gross profit at 17 per cent works out to Rs. 2,175 2,175 . 31,440 Thereafter the ITO gave a relief of Rs. 6,000 which it was stated was towards overhead expenditure and brought to tax ....

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....ecause the stock was taken over by the successor firm at the same value. The learned counsel submitted that even if the revaluation was permissible, the market value alone had to be taken for the stock. He submitted that the assessee-firm had been in existence for several years. At no stage the dead stock had been written off. Business done was in cut pieces. He stated that where cut pieces remain....

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.... was with reference to overheads. He, therefore, stated that in any view of the matter no further deduction was warranted. 6. We have considered the rival, submissions. When a firm is dissolved even if, stock was earlier valued at cost price, the ratio of, the decisions referred to go to show that the market value of the stock would have to be taken. What the ITO did was to apply the rate of gr....