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2016 (1) TMI 977 - AT - Income TaxSuccession of the firm - revaluation of assets - claim of depreciation by the assessee allowed by CIT(A) - cost of acquisition - AO was of the firm belief that the transaction does not constitute transfer in terms of Sec. 2(47) of the Act. According to the AO, the revaluation of the assets was only an increase in the value on paper and depreciation on the revalued assets cannot be allowed as per the provisions of the Act. - Not to be treated as transfer u/s 47(xiii) Held that:- A perusal of the assessment order shows that the AO has heavily relied upon Explanation-1 to Sec. 43(6) of the Act. The relevance of the applicability of Explanation-1 to Sec. 43(6) of the Act is highly questionable in the hands of the present assessee inasmuch as the said explanation refers to the provisions of Sec. 170(2) of the Act which is relevant when the predecessor cannot be found then the assessment of the income of the previous year in which the succession took place upto the date of succession and of the previous year preceding that year shall be made on the successor in like manner and to the same extent as it would have been made on the predecessor. The facts of the case in hand do not warrant any relevance to the aforesaid provision of the Act. It would not be out of place to mention here that the revaluation of the assets is supported by the certificate of a registered valuor and the AO has not appointed his own valuor for valuation of disputed assets nor the AO has disputed the valuation adopted by the assessee, this rules out the applicability of Explanation-3 to Sec. 43 of the Act. The partners of the firm should not receive any consideration or benefit directly or indirectly in any form or manner other than by way of allotment of shares in the company. Considering the entire facts in totality in the light of the judicial decisions referred to above, we could not find any reason to interfere with the findings of the Ld. CIT(A).- Decided against revenue
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