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2006 (2) TMI 118 - HC - Income TaxConversion of proprietary business into partnership firm – valuation of stock - "Whether, Tribunal is correct in law in holding that in the case of conversion of proprietary business into partnership firm, the stock should not be valued at market price?" - Tribunal has rightly held that though the conversion of a proprietary business into partnership is undoubtedly a transfer, it could not be said that the nominal value credited to capital account in the hands of the firm is the consideration for the transfer. It is only when the business is closed forever, the question of valuing the stock at the market price might arise. In this case, it cannot be said that the assessee has ceased to remain in the same business, when he converted his proprietary business into a partnership. That apart the Revenue has also not placed any material before the Appellate Tribunal to sustain its claim that the stock should be valued at the market price. In the absence of any material placed before the Appellate Tribunal, we hold that the Appellate Tribunal was justified in coming to the conclusion that the closing stock should not be valued at the market price.
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