2001 (12) TMI 12

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....IMHA BABU J.-The assessee-company had been on September 1, 1980, admitted as a partner in a firm whose other two partners were the only two shareholders and directors of the company. That firm was dissolved with effect from October 18, 1981, and as per the terms of the dissolution the assessee took over all the assets and liabilities of the firm. According to the assessee, the assets were taken ov....

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....o an enhanced cost), the actual cost to the assessee shall be such an amount as the Assessing Officer may, with the previous approval of the Joint Commissioner, determine having regard to all the circumstances of the case." The Assessing Officer found that while the original cost of the machineries was Rs. 90,68,955.57, the written down value of those machineries as per the firm's assessment wa....

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....fore us is at the instance of the assessee and the question referred is: "Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the provision of Explanation 3 to section 43(1) applied to the facts of the case and that the assessee is not entitled to depreciation on the book value of assets of the earlier firm but only on the value as fixed by the Inc....

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....ord to substantiate that claim. The fact that the assessee had adopted the market value at the time of dissolution even when such value is much higher than the written down value, would afford sufficient basis for invoking Explanation 3 to section 43(1) when the surrounding circumstances indicate that the purpose of the transfer of the assets directly or indirectly to the assessee where the ass....