TMI Blog2018 (9) TMI 1458X X X X Extracts X X X X X X X X Extracts X X X X ..... rders of the authorities below. Sub-sec(6) of sec. 43 defines ‘Written Down Value’ and it provides for both the acquisition of assets during the relevant previous year and acquisition of assets before the relevant previous year and both the clauses mention ‘actual cost to the assessee’. In the second circumstance i.e where the assets are acquired before the previous year as in the case of the assessee before us, the WDV shall be the actual cost to the assessee less all depreciation actually allowed to him under the Income-tax Act. Therefore, it is clear that the claim of depreciation can be examined even in the assessments years subsequent to the assessment year in which the succession has taken place. This argument is accordingly rejected. - Decided against the assessee - ITA No.204/Bang/2018 - - - Dated:- 8-8-2018 - Shri Sunil Kumar Yadav, Judicial Member And Shri Arun Kumar Garodia, Accountant Member For the Appellant : Shri M. Gandhi, CA For the Respondent : Dr. P.V. Pradeep Kumar, Addl. CIT (DR) ORDER Per Shri A.K. Garodia, Accountant Member This appeal is filed by the assessee and the same is directed against the order of ld. CIT(A)-5, Bangal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dealing with Computation of capital gains in a slump sale. 8. Without prejudice to the above, the lower authorities have failed to appreciate that the revaluation of the assets of the firm has to be necessarily carried out and the partners' accounts have to be necessarily credited in respect of such revaluation when the business of the firm is succeeded to by the company keeping in mind the business reality that the shares of the company may be listed or venture capitalists may invest in the company. 9. The lower authorities have failed to appreciate that Section 43(1) of the Act which defines the term 'actual cost' nowhere stipulates that the incurrence of the expenditure needs to be necessarily in cash. 10. The lower authorities have failed to appreciate that Board Circular No.21 dated 09.07.1969 in paragraph 11 (though currently withdrawn vide Circular No.382 for different reasons) had recognized the transfer of technical know-how or services or delivery abroad of machinery and plant for consideration in the form of Shares. 11. The lower authorities have failed to appreciate that the Board Circular No 382 dated 04.05.1984 clarifies the aspect reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Tribunal has followed another Tribunal order in assessee s own case for Assessment Years 2005-06 to 2008-09 in ITA Nos. 429 to 430/Bang/2013 dated 10.01.2014 and has reproduced the relevant paras of that Tribunal order i.e. 16 to 25 and thereafter decided the issue in para 9. He submitted that in the present year also the issue should be decided against the assessee. 4. We have considered the rival submissions. First of all we reproduce paras 8 and 9 of this Tribunal order in assessee s own case for Assessment Year 2012- 8. With respect to ground No.2, it is pointed out by the learned DR that this issue is covered against the assessee in the assessee s own case for earlier assessment years from 2005-06 to 2008-09 in ITA Nos.429 to 430/Bang/2013 dated 10/1/2014, wherein at paragraph 16 to 25 it has been held as under: 16. The first question for adjudication before us is whether the earlier partnership firm was required under law to revalue the assets before its conversion into a company. As rightly pointed out by the learned counsel for the assessee, when a partnership firm is dissolved, it needs to revalue its assets as the partners are entitled to receive the valu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stwhile partnership firm. To appreciate these contentions of the assessee, we have to examine the procedure and effect of conversion of a partnership firm into a company. The Hon ble Bombay High Court in the case of CIT Vs. TexspinEngg and Manufacturing Works reported in (2003) 263 ITR 345 (Bom) has considered the effect of conversion of a partnership firm into a limited company by virtue of sec. 575 of the Companies Act and has held that under part IX of the Companies Act, when a partnership firm is converted to a limited company, the properties of the erstwhile firm vests in the limited company. It was observed that there is a difference in vesting of the property and distribution of the property. It was held that on vesting in the limited company under part IX of the Companies Act, the properties vest in the company as they exist while distribution of property on dissolution presupposes division, realization, encashment of assets and appropriation of the realized amount as per the priority and that this difference is very important. Having observed thus, the Hon ble High Court held that there is no transfer of property and no capital gains arise fromsuch a transaction. The Hon b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion is allowable on the WDV of the asset and WDV has been defined u/s 43(6) to mean in the case of assets acquired in the previous year, the actual cost to the assessee. As actual cost to the assessee was Nil , the WD value of the assets in the hands of the predecessor firm shall be considered for the allowance of depreciation. 20. Therefore, we do not see any reason to interfere with the orders of the authorities below. 21. The learned counsel for the assessee had placed reliance upon the decision of ITAT at Ahmedabad in the case of Prakash Chemical Agencies Pvt. Ltd. reported in (2012) 136 ITD 222 (Ahd) but we find that it is the case of a takeover of the business of a partnership firm by the assessee company therein whereas in the case before us, it is the case of conversion of partnership firm into a company. Therefore, the said decision is not applicable to the case on hand. 22. The other objection of the learned counsel for the assessee is that the conversion has taken place in the previous year relevant to assessment year 2004-05 and hence it can be examined only in A.Y 2004-05 and not in subsequent year. We are unable to argue with this contention of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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