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2014 (5) TMI 96 - ALLAHABAD HIGH COURTTax liability - Brick Klin – Applicability of Compounding scheme to Transferee firm - Whether transfer of stock by assessee to M/s Rajvir Brick Field could have been treated to be a sale and excluded from compounding admitted by assessee as also the transferee firm, for both seasons, namely, 1999-2000 and 2000-01 - During season 1999-2000 (01.10.1999 to 31.09.2000) assessee was under compounding scheme for which order was passed on 30.09.2000 - The subsequent firm M/s Rajvir Brick Field was also in compounding for the reason 2000-2001 (01.10.2000 to 30.09.2001). Question has to be answered against assesse - A compounding scheme is always applicable to individual firm and stock thereunder is not transferable unless treated to be sale - Admittedly, the assessee accepted compounding in season 1999-2000 and for season 2000-01 it claims that business was taken by M/s Rajvir Brick Field, which also accepted compounding for next seasons, i.e., 2000-01 - However, the stock which remained with assessee after completion of season 1999-2000 and passed on to next season, in respect thereof it was incumbent upon assessee to go for compounding or to show the same in his records properly but taking advantage of compounding accepted by a different firm, tax liability in respect of such stock could not have been denied - The Revenue has rightly treated transfer of stock to M/s Rajvir as sale on the part of assessee in an assessment year when there was no compounding admitted by assessee and, therefore, it has rightly been taxed - Decided against assessee.
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