TaxTMI 
TaxTMI 
1998 (4) TMI 19
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....cision in relation to the question under reference in the tax case may now be briefly stated : The assessee, V. Chandraprakasa Nadar and Company, Trichy, is a registered firm and the assessment year involved is 1975-76 for which the accounting year ended on December 4, 1973, being the date on which the firm was dissolved. The firm dealt with hardware, paints, cement and building materials on retail basis. The closing stock as per books on December 4, 1973, amounted to Rs. 9,27,459.66. The assessee filed an original return admitting income of Rs. 91,890 followed by a second revised return admitting an income of Rs. 2,78,235 inclusive of an addition of Rs. 1,78,075 towards valuation of closing stock. Originally, the assessee valued t....
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....nse arising from the order of the Tribunal and, therefore, the said question requires to be refrained. The refrained question reads as under : "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in valuing the closing stock of the firm at market value on December 4, 1973, the date of dissolution of the firm ?" The juridical facts giving rise to the writ proceedings may now be briefly referred to. The firm styled V. Chandraprakasa Nadar and Co. was dissolved on December 4, 1973. On dissolution of the firm, the stock on hand was distributed among the partners. Some five partners of the dissolved firm, viz., Chandraprakasa Nadar and Co., constituted a new firm, P. Velayudha Nadar and Sons, having....
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....ning stock of its firm at the level of the closing stock of the old dissolved firm. In the light of the facts as stated above, the question that arises for consideration in the writ proceedings is as to whether the stock brought in by the five partners of the old dissolved firm, who are members of the newly constituted firm, should be valued at the same value, as was adopted in the dissolution of accounts of the old dissolved firm in the adjustment and determination of mutual accounts and rights among its partners or at the market rate, as had been determined by the Income-tax Officer in framing the final assessment on dissolution of the old firm on December 4, 1973 ? We shall now enter into the arena of discussion in rather a bid to ....
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....e. Therefore, that the partner, who takes over the stock on hand values them at cost price is of no effect." In the face of the decision in the cases of G. R. Ramachari and Co. [1961] 41 ITR 142 (Mad) and A. L. A. Firm [1991] 189 ITR 285 (SC), it goes without saying that the answer to the reframed question cannot be any one other than the one that the Tribunal was justified in valuing the closing stock, which was distributed to its partners on dissolution at the market price on the date on which the firm was dissolved. This question is answered accordingly. We shall now proceed to answer the question posed as above in the writ proceedings. Neither the decision, in the case of G. R. Ramachari and Co. [1961] 41 ITR 142 (Mad) nor the dec....
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....ities are capable of being arrived at only if such valuation, i.e. to say, market price is adopted, either for the purpose of valuing the opening stock of the newly constituted firm as well as for the purpose of valuing the closing stock of the old dissolved firm. It is perhaps to arrive at the trading results, the newly constituted firm filed an application under section 264 of the Act before the Commissioner of Income-tax for the modification of the cost value of the opening stock, into one of the market value. To say that the case of the assessee on hand does not fall within the parameters prescribed by section 264 of the Act cannot be expected to commend acceptance at our hands. Of course, the power in hearing in favour of the Com....