TMI Blog2002 (11) TMI 267X X X X Extracts X X X X X X X X Extracts X X X X ..... re was loss which has to be set aside against any likely gain out of stock transfer. (v) That provision of s. 45 applies to all the assets that are transferred on dissolution of the firm and the AO erred in isolating only the stock for the purpose of computation. (vi) That the matter deserves reconsideration since it involves substantial calculations of market value of all assets and only then any profit or loss can be arrived at. 2. Since all the grounds relate to valuation of closing stock of the firm which is dissolved but the same business was continued as a proprietary concern as such, all the grounds are adjudicated simultaneously. 3. The assessee has filed the return of income for 1992-93 on 27th Oct., 1992, along with audit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rate shown was Rs. 10,73,936, as such, difference was Rs. 49,285 in valuation of closing stock and directed for charging interest under ss. 234B, 234C and initiated penalty under s. 271(1)(c). 6. In the first appeal before learned CIT(A), the learned CIT(A) dismissed the appeal filed by the assessee. While dismissing the appeal the learned CIT(A) has relied on the order of Hon ble Supreme Court in case of A.L.A. Firm vs. CIT, Madras High Court Decision reported in 158 Taxation 119 and also the decision of Hon ble Madhya Pradesh High Court in case of CIT vs. Nathulal Jawaharchand (1997) 227 ITR 251 (MP). 7. In the appeal before us, the learned counsel of the assessee argued before us that the firm was dissolved on 31st March, 1992, and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1st March, 1992. The value of the stock has to be computed on the date of dissolution of the firm just for distribution of partners shares in capital at the time of dissolution of firm. 10. The learned counsel of the assessee relied on order of the Hon ble Supreme Court in case of Sakthi Trading Co. vs. CIT (2001) 169 CTR (SC) 297 : (2001) 250 ITR 871 (SC) "Valuation of stock Proper practice To value closing stock at cost of market price, whichever is lower Firm dissolution on death of one partner Reconstituted with remaining partners without discontinuance of business Closing stock of firm To be valued at cost of market price, whichever is lower". The Hon ble Supreme Court has reversed the decision of CIT vs. Sakthi Trading Co. (2000) 24 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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