1976 (11) TMI 55

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....artners. For the year ending October 18, 1962, relevant assessment year 1963-64, the assessee-firm installed machinery to the value of Rs. 6,76,549 and claimed development rebate to the extent of Rs. 1,69,133 calculated at 25 per cent. of Rs. 6,76,549. The firm was dissolved by the time the assessment was taken up. The date of dissolution of the firm was August 20, 1966. As per the dissolution deed the machinery in question was taken over by three of the five partners. The development rebate reserve created was also taken over as a liability by the said three partners. The Income-tax Officer in the assessment in question came to the conclusion that the machinery had been sold by the assessee before the expiry of eight years from the end of ....

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....r the purpose of its business undertaking, since the partnership firm is a unit of assessment distinct from the partners constituting it, the utilisation by the three partners of the reserve cannot be said to be utilisation of the reserve by the partnership firm and consequently the conditions for making a claim for development rebate had not been fulfilled, with the result the Income-tax Officer was justified in disallowing the claim for development rebate. The Tribunal, accepted this contention advanced on behalf of the department and allowed the appeal preferred by the department. It is the correctness of this conclusion of the Tribunal that is challenged in the form of the question referred to this court and extracted already. Section....