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2015 (9) TMI 641 - ITAT MUMBAIValuation of stock - partnership firm - Addition to income being difference between market value and the book value of the stock in trade of the appellant firm on the alleged dissolution of the appellant firm - Held that:- Once the dissolution takes place, distribution of stock in trade before the actual dissolution deed was drafted and signed will have to be valued at market price with a view to balancing the accounts. The business stated to be had come to a standstill as there was a dispute among the partners. Withdrawal of the stock in trade or distribution of the same in the profit share ratio can only be considered as a necessary or concomitant formality for dissolution or, in other words, this distribution of stock, in trade has been done in the course of dissolution and, therefore, it is imperative that valuation of such stock in trade has to be at the market price. The argument of the assessee that the amendment bought about by the Finance Act, 1987 in this regard would go to show that the law has been changed with effect from 1.4.1988 has to be rejected as irrelevant. The decision referred to above clearly go to show that when stock in trade is distributed or withdrawn at the termination of when stock in trade is distributed or withdrawn at the termination of business, they have to be value at the market price. See ALA Firm Versus Commissioner of Income-Tax [1991 (2) TMI 1 - SUPREME Court] - Decided against assessee.
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