TaxTMI 
TaxTMI 
2014 (7) TMI 998
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....ons: 1. Whether on the facts and in the circumstances of the case and on cumulative consideration of all relevant factors and in existence it could be said that the parties never intended to carry on any business and whether the nature of partnership by a deed dated 07.04.1986 was for extraneous purpose other than carrying on business? 2. Whether on the facts and in circumstances of the case, the Tribunal is correct in its conclusion that there can be a firm in existence both in form and substance and it is immaterial whether the object of the firm was to carry on business in real estate or for any other purpose? 3. Whether on the facts and in the circumstances of the case th....
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....25/-, under Section 139B of the Act, and an additional interest, of Rs. 29,571/-, under Section 217 of the Act, were levied. Aggrieved by the order of the Assessing Authority, the applicant carried the matter in appeal before the Commissioner. The order of the ITO was affirmed, by the Commissioner, through his order, dated 01.02.1991. Thereafter, the applicant filed I.T.A.No.488/Hyd/1991 before the Tribunal. The appeal was dismissed, through a detailed order, dated 26.06.1992. The applicant filed R.A.No.303 of 1992 with a request to refer the three questions, mentioned above, to this Court. When the request was not acceded to, he approached this Court by filing R.C., and on a direction issued therein, the questions were referred. ....
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....some precedents. Sri S.R.Ashok, learned Senior Standing Counsel for the Income Tax Department, on other hand, submits that, once the firm was brought into existence, through a registered document and certain profits were also posted in the profit and loss account, it cannot be treated as a nominal entity, and that questions 1 and 2 deserve to be answered against the applicant. He submits that in R.C.No.160 of 2000, referred to this Court, at the instance of this very applicant, the very existence of the partnership firm is not doubted, or challenged by the applicant, and that it is not open to him to plead, to the contrary, in this reference. Learned Senior Counsel further submits that whatever may be the value furnished by an assesse....
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.... situation exists in the instant case. As a result of dissolution of the firm, redistribution of the properties took place in a manner, different from the one, in which they were held before the constitution of the firm. That, in turn, attracted imposition of gift tax. The matter landed before this Court in the form of R.C.No.160 of 2000 at the instance of the applicant herein. The applicant did not dispute the existence of firm. The plea, on the other hand, was that the dissolution of the firm does not bring about any transfer of property, and thereby, the occasion to levy the gift tax, does not arise. Having acknowledged the existence of firm in that case, the applicant cannot plead to the contrary, in this case. Therefore, questions 1....
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.... it, in fact, is the root cause of the entire controversy. It is on account of the escalation of the value that the incidence or imposition of tax together with interest has arisen. The contention of the learned counsel for the applicant is that, in the context of determining the value of an item of stock in trade the determination can be either by taking its cost, or the prevailing market value into account and an assessee is always entitled to adopt a figure whichever is less or advantageous to him. Another argument advanced in this behalf is that in case the ITO was empowered to re-determine the value of an item, which forms part of the stock in trade, at the stage of dissolution, he is equally under obligation to determine the value the....
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....whether on account of dissolution or closure or otherwise by the assessee, then the profits cannot be ascertained except by taking the closing stock at market value This was followed by the Supreme Court in the subsequent judgments, including Shakthi Trading Co. v. C.I.T. 250 ITR 871. With this, it becomes clear that whatever may have been the liberty of an assessee to choose between the cost and market value of an asset, whichever is beneficial to him; that liberty stands taken away when the firm is dissolved, or the business activity is discontinued. For the purpose of determining the value of property, which is allotted to the respective partners on dissolution, it is only the market value that becomes relevant; and that exac....