2006 (2) TMI 118

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....t the instance of the Revenue, the Income-tax Appellate Tribunal has stated a case and referred the following question of law for our consideration: "Whether, on the facts and in the circumstances of the case, the Tribunal is correct in law in holding that in the case of conversion of proprietary business into partnership firm, the stock should not be valued at market price?" The assessment ....

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....ons in the case of G.R. Ramachari and Co. v. CIT [1961] 41 ITR 142 (Mad) and A.L.A. Firm v. CIT [1976] 102 ITR 622 (Mad) and directed the Assessing Officer to apply the ratio laid down in the above cases. On appeal by the assessee, the Income-tax Appellate Tribunal set aside the order of the Commissioner of income-tax (Appeals), following the Supreme Court decision in the case of Sunil Siddharthbh....

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....T [2003] 264 ITR 431. It is an established rule of commercial practice and accountancy that where there was no discontinuance of business, the closing stock is to be valued at cost or market price, whichever is lower by conversion. The Supreme Court and this court in the decisions cited supra, held that since there was no cessation of business, the closing stock had to be valued at cost or mark....