TMI Blog2003 (11) TMI 44X X X X Extracts X X X X X X X X Extracts X X X X ..... llowed – Held, no - - - - - Dated:- 5-11-2003 - Judge(s) : R. JAYASIMHA BABU., S. R. SINGHARAVELU. JUDGMENT The judgment of the court was delivered by R. JAYASIMHA BABU J.-The question is as to whether the appellant assessee had contravened section 155(4A) and/or section 32A, sub-section (5), by reason of constitution of a new firm comprising of all its original partners except the deceased partner, and the widow of the deceased partner, which firm had taken over all the assets and liabilities of the firm which was dissolved on October 26, 1987, on the death of the father, Balakrishna Pillai, the founder of the firm, that had been founded on November 9, 1976, and had comprised of himself, his three sons and his two daughters. Afte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that as the old firm ceased to exist on dissolution, the new firm cannot be regarded as a continuation of the old one, that there was transfer of assets of the old firm to the new and therefore there was contravention of section 155(4A) of the Act. It has gone further and held that there was contravention of section 155(4B) also although that was not a ground on which the Deputy Commissioner has made his order. Learned counsel for the assessee rightly points out that when a firm is dissolved and the rights of the erstwhile partners are mutually adjusted, there is no transfer. That is the law laid down by the Supreme Court in the case of Malabar Fisheries Co. v. CIT [1979] 120 ITR 49, a decision rendered by a three judge Bench. The court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not effect any transfer or sale. Clearly there was no contravention of section 155(4A) or section 32A(5) by reason of dissolution of the old firm. Section 155(4A)(b) as also section 32A(5)(b) refer to a situation where the assessee who has received the benefit has failed to utilise the amount credited to the reserve account created under section 32A(4) for the purpose of acquiring a ship, or a new aircraft, or a new machinery. Those provisions have no relevance here, as it has been found by the Commissioner that the amount which had been credited to the reserve had been utilised for the purchase of new machinery within the period allowed by law, by the old firm prior to its dissolution. Counsel for the Revenue, however, sought to cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pecific finding recorded by the Commissioner here is that the very assessee who had obtained the investment allowance and who had created the reserve had, in fact, utilised the amount. The Tribunal as also the assessing authority have needlessly embarked on a fruitless endeavour without first ascertaining the facts. When once it is found that the investment allowance had been utilised and the machineries had been purchased by the very assessee who had received the benefit of the allowance, and there was nothing to show that that assessee had transferred the assets so acquired, there was no occasion whatever for invoking section 155. In this case, if the partners of the firm which had been founded by the father had on the death of their fa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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