TMI Blog1992 (12) TMI 92X X X X Extracts X X X X X X X X Extracts X X X X ..... 0, viz., 6-11-1980. In her letter dated 10-10-1980 she informed the other partner " Kindly pay all the amounts standing to the credit of my capital and current account as on Diwali 1980. As agreed to between us, this will settle our accounts and nothing will be due either by me or you ". The accounts being settled on that basis, the return was filed showing the profit in the books and the assessment was completed on a total income of Rs. 1,73,080. Subsequently, the ITO was of the view that the closing stock had to be valued at market value on the date of dissolution. He accordingly made a re-assessment and by re-valuing the closing stock added the sum of Rs. 1,60,301 to the total income. 3. The assessee appealed and contended that there w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he results of the business and bring to tax income which has not been actually realised. What is more, since the business has been taken over as a going concern by the other partner, the same profit will be taxed again when actually realised. Section 48 of the Partnership Act gives the rules in settling the accounts of the firm after dissolution and is subject to the agreement by partners. Therefore, when the parties have agreed that the dissolution accounts should be made in accordance with the book values, it cannot be substituted by market value to assess the notional income which was not the real income of the firm. The Supreme Court itself has pointed out that " there can be no manner of doubt that in taking accounts for purposes of di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o pick out a word or a sentence from the judgment of the Supreme Court divorced from the context of the question under consideration and treat it to be the complete law declared by the court. The judgment must be read as a whole and the observations from the judgment have to be considered in the light of the questions which were before the court. A decision of the Supreme Court takes its colour from the questions involved in the case in which it is rendered and, while applying the decision to a later case, courts must carefully try to ascertain the true principle laid down by the decision ". We cannot therefore read the decision of the Supreme Court in A.L.A. Firm's case as authorising the Income-tax Officer to substitute his own estimate o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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