TMI Blog2005 (2) TMI 463X X X X Extracts X X X X X X X X Extracts X X X X ..... year 1996-97. Ground No. 1: The CIT(A) erred in holding that on conversion of proprietary concern into a partnership firm as a going concern the decision of Apex Court in case of ALA firm would apply and closing stock is to be valued at market rate and to be taxed under the head income from business. 2. The brief facts of the case are that the assessee was a proprietor of M/s. Garment Crafts, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of market value of finished goods to Assessing Officer afresh. 3. The ld. AR submitted that facts of the case of A.L.A. Firm is distinguishable from the present case as explained at pages 3-4, para 4 of ld. CIT(A)'s order. After the decision of the ld. CIT(A) in the present case, the Hon'ble Supreme Court had held in the case of Sakthi Trading Co. v. CIT [2001] 250 ITR 871 (SC), that as per th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In the case of Sakthi Trading Co., the firm was dissolved on death of one of the partners and the business was continued by reconstituting firm with remaining partners. There was no discontinuances of business. In this judgment, the Hon'ble Apex Court held that it is an established rule of commercial practice and accountancy that where there is no discontinuances of business the closing stock is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ietor to adopt the lower of the two. The facts of case relied upon by the ld. DR in the case of Rajlaxmi Trading Co. are distinguishable. Therefore, the Assessing Officer is directed to value the stock-in-trade at cost or market price whichever is lower after obtaining requisite details from the assessee. This issue is restored to the file of the Assessing Officer with the direction that he should ..... X X X X Extracts X X X X X X X X Extracts X X X X
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