1974 (11) TMI 20

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....s, Puranmal as representing one Hindu undivided family, and Manilal as representing another Hindu undivided family. The firm had acquired certain assets, including machinery, on which depreciation was being allowed in the assessments under section 10(2)(vi) of the Act.The firm was, however, dissolved as from 6th April, 1949. On the 19th April, 1949, two documents were executed between the partners, one a deed of dissolution and the other a deed of release. In both these documents it was provided that Puranmal, who retired from the firm leaving the entire business to be carried on by Manilal, was to be paid a sum of Rs. 1,25,000 for transferring his right, title and interest in the assets of the firm mentioned in the said deeds, which includ....

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....lution of their firm and, therefore, there could not be said to have been a sale of machinery by the firm to, its partners, or a sale of machinery by Puranmal by relinquishing his right therein. In taking that view, the Tribunal relied on two decisions of this court, one in the case of Commissioner of Income-tax v. Sir Homi Mehta's Executors and the other in the case of Rogers & Co. v. Commissioner of Income-tax. The Tribunal, therefore, held that no profit could be assessed in the hands of Puranmal, as the provisions of section 10(2)(vii) of the Act did not apply. It is from that order that this reference in which the question set out above has been referred to us at the instance of the Commissioner arises. Mr. Joshi has very fairly sta....

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....nd Bankey Lal Vaidya's case, the question referred to us on, this reference must, in my opinion, be answered against the revenue. In the event of my being wrong in the view that the question as to whether the taking over of the assets by Manilal was a part of the transaction of dissolution of the firm is a question of fact, I would still hold that this reference must be answered against the revenue, because, in my opinion, even on a construction of the relevant provisions of the said deed of dissolution, as well as the deed of release, it is quite clear that the taking over of the machinery as a part of the assets of the firm by Manilal was a part of the adjustment made between the partners in the course of the dissolution of the firm. F....