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2010 (3) TMI 903 - AT - Income TaxTransfer of business of partnership firm to company - closing stock and some asset taken over by the partner - capital gain - deduction of interest valuation of closing stock - held that:- Not only addition in the fixed assets, there is repayment of unsecured loans also which has come down to Rs. 5 lakhs as on 17-9-1991 as against the opening balance of Rs. 10 lakhs. If the assets and liabilities are not taken over by the assessee-firm how deduction on account of interest payment on loan is claimed in the profit and loss account. Value of asset transferred to partner after dissolution of partnership firm - held that:- the assets were transferred by the partner to the assessee-firm and on this date, no income is chargeable in the hands of Shri MM Goel who has transferred these assets to the assessee-firm as his capital contribution because such transfer was recorded in the books of the firm at book value only. But on 17-9-1991 when on dissolution of the firm, there is distribution of assets to the second partner i.e., M/s. PSPPL, market value has to be considered for the purpose of capital gain. Closing stock taken over by the partner - Assessing Officer to compute the business profit after including the difference in market value in closing stock as on 17-9-1991 and book value of closing stock as shown by the assessee in profit and loss account and such difference should be added in business income of the assessee. Allowability of deduction to the assessee under section 80-I - industrial undertaking – whetehr benefit of section 80-I were attached to the undertaking and not to the owner thereof and the assessee having taken over the running under taking which was otherwise entitled to the benefit of section 80-I – Held that:- Assessee-firm was formed by the reconstruction of a business already in existence as a sole proprietory concern of Shri M.M. Goel and hence, the assessee does not fulfill the conditions laid out in section 80-I(2)(i) and therefore, the assessee is not entitled for deduction under section 80-I of the Act - ground of the revenue is also allowed - appeal of the revenue is allowed
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