TMI Blog1998 (8) TMI 109X X X X Extracts X X X X X X X X Extracts X X X X ..... also in the dissolution deed, it has been mentioned that in addition to the final bill the firm also submitted further claims to the Government of Gujarat in connection with the said work. Notwithstanding anything contained in the agreement the benefits of the claim shall not stand transferred to the company and the partners shall be entitled to pursue the said claims and retain any amount that may be allowed by the Government or otherwise recover in respect of the said claim or any part thereof. Thereafter pursuant to the award given by the arbitrator the partners received the interim award of Rs. 95,80,700 and final award of Rs. 16,29,000 total Rs. 1,12,09,700 and also interest award of Rs. 36,15,176. Upon receipt of the aforesaid money, the original assessment framed by the AO was reopened under s. 147 of the Act by the officer with a view to include the aforesaid amount as income of the firm. In the aforesaid background the present assessment has been made and both the assessee and the Revenue has come up in appeal against the order passed by the CIT(A). 2. The first ground of appeal is as follows: "The learned CIT(A) has erred in deleting the addition made by the AO on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsidering the entire circumstances of the case, we are of the opinion that the finding recorded by the first appellate authority is justified which requires no interference. 3. The next ground of appeal is as under: "The learned CIT(A) has erred in law and on facts in deleting the addition made on account of revaluation of assets Rs. 53,25,000." 3.1. The AO made the addition on revaluation of the assets on the basis of the decision of Supreme Court A.L.A. Firm vs. CIT (1991) 93 CTR (SC) 133 : (1991) 189 ITR 285 (SC). 3.2. The CIT(A) deleted the addition holding that the aforesaid decision of the Supreme Court is not applicable in the present case. 3.3 The learned Departmental Representative has relied on the finding recorded by the AO on this issue. It appears that the value of the capital assets on transfer was taken at Rs. 10,50,080 at the book value. The AO after taking into consideration the market price of the assets on the basis of rent receipt on the hiring of plant and machinery at the rate of 12 per cent worked out the valuation at Rs. 63,75,000 and the difference was added to the income of the assessee-firm. 3.4 After hearing both the sides, we find tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, on the other hand, submitted before us that the firm has nothing to do in respect of the aforesaid amount because when the amount was received the firm was not in existence. The amount was received during the asst. yr. 1988-89 pursuant to the dispute raised before the Government by the firm but in the meantime on 1st July, 1984 the firm was taken over as a running concern by the company and further on 16th Aug., 1984, the firm itself was dissolved. As per stipulation mentioned in the agreement and also the dissolution deed the present claim will go to the hands of the partners and not to the company. For the asst. yr. 1988-89 the AO was of the view that the transfer of the firm to the company was made by the assessee with a view to avoid the liability of tax and the provisions of McDowell Co. Ltd. vs. CTO (1985) 47 CTR (SC) 126 case of the Supreme Court was attracted and the matter went ultimately to the Hon'ble High Court and in (1996) 131 CTR (Guj) 127 : (1996) 222 ITR 831 (Guj) it has been held by the High Court that the decision of McDowell's case is not applicable in respect of the present transfer. There was no evidence brought on record that the transfer of business was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est who receive. Both sub-ss. (3A) and (4) provide for taxing recipients of the sums provided the same would be a taxable income in the hands of the person who may be different from the person receiving it, had it been received before discontinuance of the business or profession. Therefore, even assuming that the receipt of the amounts pursuant to the award by the partners was a receipt of a discontinued business it cannot be taxed in the hands of the firm under sub-s. (3A) because the firm having stood dissolved when the amount was awarded it could not have received the sum as a firm. It could have been received only by the partners of the firm and has in fact been so received." Considering the aforesaid circumstances, in our opinion, the finding recorded by the first appellate authority requires no interference. 5. In the result, the appeal is dismissed. ITA No. 1/1993 In assessee's appeal although there are so many grounds, but the first effective ground is that the CIT(A) was not justified in holding that the previous year for the asst. yr. 1985-86 ended on 31st March, 1985. The learned counsel on behalf of the assessee has submitted that now it has been accepted by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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