TMI Blog2015 (9) TMI 641X X X X Extracts X X X X X X X X Extracts X X X X ..... dered 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 The decision referred to above clearly go to show that when stock in trade is distributed or withdrawn at the termination of when stock in trade is distributed or withdrawn at the termination of business, they have to be value at the market price.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 Commission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e revalued price from the 5 firms on retirement from these firms, as it is one of the grievances of the department that these partners have got revalued price from Viral Hotels Theaters Pvt Ltd on retirement from these 5 firms and not paid any tax on the amount of ₹ 3 crores received by all the partners. 5. The learned Commissioner of Income Tax (Appeals) further erred in relying on the finding given by the Hon. Madras High Court in the case of G R Ramachari Co. 41 ITR 142 while not giving any finding on the submissions of the appellant that the findings of this case are not applicable on the facts of the appellant s case. 6. The learned Commissioner of Income Tax (Appeals) further erred in relying on the decision of the H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 55,39,777/-. This receipt of ₹ 3,01,60,223/- was considered by the assessee as nontaxable, but the AO held that unsold stock of flats and land shall be taken as SIT on the date of dissolution of the firm. 4. This is the point which is impugned before us. 5. Before us, the DR relied on the orders of the revenue authorities but there was no attendance on behalf of the assessee. 6. We have heard the arguments of the DR and have pursued the issue in details from the orders of the AO and the CIT(A). The CIT(A) has observed, I have carefully considered the submissions of the assessee/appellant and in my opinion they cannot be accepted. No serious exception can be taken to the submission of the assessee/appellant that when stoc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arrived at. The position is not very different when the partnerships ceases to exist in the course of the accounting year. The fact that R one of the ex-partners, took over the entire stock and continued to run the business on his own, was not relevant at all, when the profits or losses of the partnership was considered which had come to an end. It should, therefore, follow that in order to arrive at the correct picture of the trading results of the partnership on the date when it ceases to function, the valuation of the stock in hand should be made on the basis of prevailing market price. In a case of this kind the market price alone should be taken in order to arrive at the trading results of the business. The judgment of the High Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee has no authority to sustain it . 25.7. Thus, it would appear 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. In this case, the stock in trade was actually withdrawn in the latter half of November, 1982 when the actual dissolution deed was effected soon thereafter 31.12.1982. Therefore, this would not go to detract the merits of the department s case. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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