TMI Blog1998 (4) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... may now be briefly stated : The assessee, V. Chandraprakasa Nadar and Company, Trichy, is a registered firm and the assessment year involved is 1975-76 for which the accounting year ended on December 4, 1973, being the date on which the firm was dissolved. The firm dealt with hardware, paints, cement and building materials on retail basis. The closing stock as per books on December 4, 1973, amounted to Rs. 9,27,459.66. The assessee filed an original return admitting income of Rs. 91,890 followed by a second revised return admitting an income of Rs. 2,78,235 inclusive of an addition of Rs. 1,78,075 towards valuation of closing stock. Originally, the assessee valued the closing stock at cost as hitherto been done, but in the light of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on requires to be refrained. The refrained question reads as under : "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in valuing the closing stock of the firm at market value on December 4, 1973, the date of dissolution of the firm ?" The juridical facts giving rise to the writ proceedings may now be briefly referred to. The firm styled V. Chandraprakasa Nadar and Co. was dissolved on December 4, 1973. On dissolution of the firm, the stock on hand was distributed among the partners. Some five partners of the dissolved firm, viz., Chandraprakasa Nadar and Co., constituted a new firm, P. Velayudha Nadar and Sons, having their place of business at 28, Pala Kharai Road, Trichy-8 on December 9, 197 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... firm. In the light of the facts as stated above, the question that arises for consideration in the writ proceedings is as to whether the stock brought in by the five partners of the old dissolved firm, who are members of the newly constituted firm, should be valued at the same value, as was adopted in the dissolution of accounts of the old dissolved firm in the adjustment and determination of mutual accounts and rights among its partners or at the market rate, as had been determined by the Income-tax Officer in framing the final assessment on dissolution of the old firm on December 4, 1973 ? We shall now enter into the arena of discussion in rather a bid to find out an answer to the reframed question in the tax case. Our endeavour in s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st price is of no effect." In the face of the decision in the cases of G. R. Ramachari and Co. [1961] 41 ITR 142 (Mad) and A. L. A. Firm [1991] 189 ITR 285 (SC), it goes without saying that the answer to the reframed question cannot be any one other than the one that the Tribunal was justified in valuing the closing stock, which was distributed to its partners on dissolution at the market price on the date on which the firm was dissolved. This question is answered accordingly. We shall now proceed to answer the question posed as above in the writ proceedings. Neither the decision, in the case of G. R. Ramachari and Co. [1961] 41 ITR 142 (Mad) nor the decision in the case of A. L. A. Firm [1991] 189 ITR 285 (SC) had the occasion to deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rice is adopted, either for the purpose of valuing the opening stock of the newly constituted firm as well as for the purpose of valuing the closing stock of the old dissolved firm. It is perhaps to arrive at the trading results, the newly constituted firm filed an application under section 264 of the Act before the Commissioner of Income-tax for the modification of the cost value of the opening stock, into one of the market value. To say that the case of the assessee on hand does not fall within the parameters prescribed by section 264 of the Act cannot be expected to commend acceptance at our hands. Of course, the power in hearing in favour of the Commissioner under the section is capable of being exercised subject to other provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t market price. The point is answered accordingly. I The tax case and the writ petition are thus disposed of. There shall, however, be no order as to costs, on the facts and in the circumstances of the case. After the dictation of the order in the open court was completed, Mr. S. V. Subramaniam, learned senior counsel, representing the Revenue, made an oral application under article 134 of the Constitution of India, praying for a certificate to be issued for appeal to the Supreme Court that the question involved in the writ petition is a substantial question of law of general importance and we also feel that such a question needs to be decided by the Supreme Court by way of an authoritative pronouncement and in this view of the matter, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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