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TMI Blog2015 (9) TMI 641X X X X Extracts X X X X X X X X Extracts X X X X ..... firm on the alleged dissolution of the appellant firm. 2. The learned Commissioner of Income Tax (Appeals) further erred in confirming the finding of the Assessing Officer that stock in trade was distributed amongst the partners on dissolution of the appellant firm and not withdrawn by the partners during the course of the running business of the appellant firm. 3. The learned Commissioner of Income Tax (Appeals) further erred in rejecting the legal position that the amended provision of Section 45(4) is applicable with effect from 01.04.1988 while the appellant firm was dissolved on 31.12.1981 by holding that the same is irrelevant. 4. The learned Commissioner of Income Tax (Appeals) further erred in not considering and giving a findin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... another, at the time of hearing". 2. This is the second round of appeal, wherein, in the first round, the coordinate Bench of the ITAT had restored the matter to the file of the CIT(A) on technical ground. 3. The facts are that the assessee is a firm with 16 partners, belonging to 5 groups, who used to undertake development projects. Sometimes in 1982, disputes arose between the partners and the ongoing projects came to halt on 17.11.1982. The unsold stock of flats and land were distributed on 31.12.1982. The unsold stock of flats and land were taken over by a consortium of five new firms. The outgoing partners received monetary consideration at the revalued price, which came to Rs. 3,01,60,223/-, being difference of revalued price at Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of Income-tax (41 ITR 142) has explained the legal provisions regarding the valuation of stock in trade on cessation of business. "The privilege of valuing the opening and closing stocks in a consistent manner is available only to continuing businesses and it cannot be adopted where the business comes to an end and the stock-in-trade has to be disposed of in order to determine the exact position of the business on the date of closure. The case of a firm which goes into liquidation forms a close parallel to the instant case. In such a case all the stock-in-trade and other assets of the business will have to be sold and their value realized. It cannot be controverted that it is only by doing so that the true state of the profits or losses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rship in order to arrive at the true position of the profits of the partnership. Therefore, the valuation of the closing stock as adopted by the Tribunal was correct. Note: The case was decided in favour of the revenue. [Cases referred to -Chainrp Sampatram v CIT [1953] 24 ITR 481 (SC), Chouthmal Golapchand, in re AIR 1939 Cal. 559, CIT v Ahmedabad New Cotton Millls Co. Ltd. ILR 54 Bom. 213 and Sir Kikabhai Premchand vs CIT (1953) 24 ITR 506 (SC). The relevant observation is at page 146 and is reproduced as under: "It is obvious that when a business ceases, all its stock-in-trade has to be disposed of and brought to account in order to balance the books. The goods on hand do not lose the character of stock-in-trade, and this proposition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his reliance on various case laws, the ratio of judgments are not applicable to the present facts if tge appellant, therefore, with due regards to all the judicial pronouncements relied upon by the Ld. AR, are found to be distinguishable on facts. Keeping in view of the factual position as well as the legal procurements made by the Hon'ble Court, I as unable to accept the plea of the appellant against the Assessing Order passed u/s 143(3) r.w.. 263 of the I.T. Act, 1961". 7. From the facts available, we are of the opinion that the order of CIT(A) does not suffer from any infirmity. We also find that the case of ALA firm as decided by the Hon'ble Madras High Court got its approval from the Hon'ble Supreme Court, as reported in 189 ITR 285. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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