TMI Blog1991 (1) TMI 131X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment year 1974-75, the assessee was a firm and, on January 21, 1974, the firm was dissolved and its assets and liabilities as well as its entire business were taken over by M/s. Indian Reinforcing Corporation (Welded Mesh) Pvt. Ltd. as a going concern. In working out the total income of the assessee, the Income-tax Officer found that the balance-sheet, as on the day prior to the dissolution, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... firm, the stock-in-trade had to be valued at market value. On this basis, the difference between the closing stock value as given and the market value amounting to Rs. 2,55,081 was subjected to assessment. On appeal by the assessee before the Appellate Assistant Commissioner, he took the view that the closing stock had been properly valued at cost, though the firm was dissolved, and deleted the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to year by taking the cost as the basis, the Tribunal dismissed the appeal. That is how the following question of law under section 256(1) of the Income-tax Act, 1961, at the instance of the Revenue, has been referred to this court for its opinion: "Whether, on the facts and in the circumstances of the case, the addition of Rs. 2,55,081 towards closing stock valuation was justified." Recently ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would apply to this case as well. However, learned counsel for the assessee contended that the business of the firm had not been totally stopped, but had been continued by a company and that would make all the difference to the applicability of the decision referred to above. We may point out that in G. R. Ramachari and Co. v. CIT [1961] 41 ITR 142 (Mad), a similar argument raised on behalf of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dissolution of a firm, the closing stock has to be valued is well-settled as the market value, the valuation has to be done only in accordance with that. It may be that the other items may be left untouched. That, however, cannot be a justification for not valuing the closing stock on the dissolution of a firm at market rate as laid down by series of decisions. We, therefore answer the question re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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