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TMI Blog1971 (9) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... n the venture to the assessee-company and Messrs. Bhagwan Raja Patel sold their interest to Patel Engineering Co., so that the persons now interested in the venture were the assessee-company and Messrs. Patel Engineering Co. Ltd. The stock of the disposal machinery remaining unsold were thereafter divided between the assessee and Patel Engineering Co. Ltd. The assessee received machinery valued at Rs. 2,06,372 as its share. In the assessee's account books for 1949-50 the value was written up by Rs. 4,00,000, an equivalent sum having been credited to a capital reserve account. During this accounting period the assessee and Patel Engineering Co. Ltd. formed a partnership firm known as " Hind Patel Co." in which each had an eight annas share a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing year for the purpose of assessment for the year in question ; and (3) that the disposal machinery which were acquired at Assam were mainly for the purpose of executing their own contracts, namely, the contracts of earth work, etc., which required such machinery as had been obtained and not for sale. The Income-tax Officer held, disagreeing with the assessee's contention, that it was a sale of machinery and the amount for which it was actually sold to the firm fell not within the financial year 1949-50 but during the year under consideration. The Income-tax Officer further observed that earlier balance sheets of the assessee showed that it had transferred machinery, furniture, office equipments, etc., from time to time as necessity aro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat there could be no element of transfer or sale involved in a transaction between one's own self. The Tribunal observed that the capital in the partnership firm between the assessee and the aforesaid Messrs. Patel Engineering Co. Ltd. was comprised of the written up value of the machinery which fell to each of the above mentioned partner's shares. The value of those machinery had not been written up in the firm's books but the partners themselves after having valued their shares of the machinery at an appreciated price in their own books contributed it as their capital in the partnership firm. The Tribunal further observed that the partnership was neither purchasing nor the partners were selling and what the two partners were actually doi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these findings. The machinery that fell to the share of the assessee was never sold. Therefore, there was no question of the assessee making any profit out of them. No one can sell his goods to himself. A sale contemplates a seller and a purchaser. If a person revalues his goods and shows a higher value for them in his books, he cannot be considered as having sold these goods and made profits therefrom. Nor can a person by handing over his goods to a partnership of which he is a partner and that as his share of capital be considered as having sold the goods to the partnership. It is difficult to appreciate the arguments advanced on behalf of the department that there was a sale either at the time when the assessee showed an inflated price ..... X X X X Extracts X X X X X X X X Extracts X X X X
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