1986 (7) TMI 196

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....e, no business was done and since there was no business there was no partnership. He, therefore, took the status, though registration was sought, as an unregistered firm. 2. Coming to the quantum, a loss of Rs. 70,003 was claimed by the assessee. This was as a result of expenses debited in the account such as salary, rent, interest, etc. The ITO held that the expenses could not be allowed as they could not be said to have been laid out wholly and exclusively for purposes of business or profession under s. 37 of the IT Act. The assessment was, therefore, closed as `Nil assessment. 3. The assessee appealed to the AAC. It was submitted that declaration in Form No. 12 was filed and as such continuation of registration should not have been den....

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....ld, departmental representative placed considerable stress on two decisions, viz, Vijay laxmi Sugar Mill Ltd. vs. CIT (1972) 86 ITR 402 (All) which was the case of company which had gone into liquidation and it was submitted that if a liquidator was merely realising the assets of the company, he could not be said to be carrying on business. Another decision relied on was that the Madras High Court in the case of Liquidator, Delts Plantation Company Ltd. vs. State of Madras (1965) 56 ITR 428 (Mad). He submitted that the trading activity of a company may continue even after the commencement of its winding up, but whether a particular transaction was realisation of an asset or not depended on the facts of the case. 6. The ld. counsel for the ....

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.... though in a different contest: "The riders in a race do not stop short when they reach the goal. There is a little finishing centre before coming to a standstill". There were business activities in this assessment-firm which he started in 1970 right upto and including 31st March, 1978 when there were business receipts from cooly charges. So the business was physically being carried on by the firm upto that date. No doubt from 1st April, 1978 to 31st March, 1979 there were no receipts as such. But when the receipts stopped on 31st March, 1978, as we observed, there were quite a number of sundry debtors and sundry creditors. Even taking the argument of the Revenue that there were no receipts in this year, unless the firm was being dissolve....