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2005 (7) TMI 73 - HC - Income Tax"(1) Whether Tribunal was right in law in holding that the assessee had claimed depreciation on the machinery and, therefore, the assessee is liable to tax on profits of Rs. 2,13,705 u/s 41(2)? (2) Whether, Tribunal was right in law in holding that the assessee is liable to tax on profits u/s 41(2) even though depreciation was claimed by the partnership firm which was dissolved and the machinery were allotted to the assessee who sold the same after dissolution of the firm?" - Having noticed the difference between the status of the partners of a living partnership firm and that of a dissolved firm, the assessee/applicant cannot be said to be a person who had reaped the fruits of the depreciation enjoyed by the firm when it was a living partnership firm. The sale of properties of the dissolved partnership will not attract tax on the amount of the depreciation enjoyed by the partnership firm. That amount cannot be brought to tax. – Thus, questions are answered in the negative, i.e., against the Revenue and in favour of the assessee
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