TMI Blog1998 (2) TMI 23X X X X Extracts X X X X X X X X Extracts X X X X ..... the facts and in the circumstances of the case, the Tribunal was right in holding that in computing the capital gains arising to the assessee by sale of machinery in question the cost of acquisition should be the revalued amount in the hands of the new firm, viz., Rs. 8 lakhs, and not the original cost in the hands of the predecessor-firm, viz., Rs. 10,68,017 ? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was right in upholding the disallowance of advertisement expenditure under section 37(3A) of the Income-tax Act ?" The question referred at the instance of the Revenue is : "Whether, on the facts and in the circumstances of' the case, the Appellate Tribunal was right in holding that the capital gain on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive the asset as a consequence of a dissolution of another firm of which the assessee was a partner. The assets were received by the partners as individuals, who thereafter made that asset the asset of the new partnership firm constituted under the deed dated June 16, 1977. One of the items that was thus brought into the new firm was a bottling machine of German origin, which was shown in the assessee's books of account at the revalued figure of Rs. 8 lakhs, although that machine had been acquired by the firm in which the partners of the assessee had been partners at a cost of Rs. 10,68,017. The dissolved firm, at the time of dissolution of the firm had been allowed depreciation on the machine, and the written down value of the bottling mac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of dissolution of the old firm. Section 50 would only apply to the cases where the "assessee" had obtained the depreciation. Having regard to the statutory provision, namely, section 50 of the Act, the answer to the question referred at the instance of the Revenue must be in the affirmative. As regards the related question raised by the assessee, the answer to that question also has to be in the affirmative. The Tribunal was right in holding that section 48 of the Act is to be applied and in rejecting the assessee's contention under section 49(1)(iii)(b) of the Act. The facts set out above clearly show that the assessee-firm did not receive the asset at the dissolution of the old firm but it had been received by the erstwhile partners ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re. The Commissioner had disallowed the same on the ground that section 37(3A) of the Act came into force with effect from April 1, 1979, though after the close of the relevant previous year. It is the law applicable on the date of commencement of the assessment year that would govern irrespective of as to when the expenditure had been incurred, is a proposition of law which is too well settled to require any further detailed consideration. Accordingly, we hold that the Tribunal was right in upholding the disallowance of advertisement expenditure. All the questions referred for our consideration, are, therefore, answered in the affirmative. Having regard to the circumstances of the case, the parties shall bear their respective costs. - ..... X X X X Extracts X X X X X X X X Extracts X X X X
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