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TMI Blog1987 (2) TMI 112X X X X Extracts X X X X X X X X Extracts X X X X ..... n profit to the extent of 50 per cent, 30 per cent and 20 per cent, respectively. In all the three years, the firm had claimed some investment allowance on the machineries installed by the firm. The ITO while making the assessment for the asst. yr. 1980-81 found that the machinery belonging to the firm had been transferred to the partners in that year. He also found that the reserve created for investment allowance had also been transferred to the partners. The ITO was of the view that the machinery had been transferred to the partners and, therefore, the investment allowance which had been allowed had to be withdrawn under the provisions of s. 155(4A) of the IT Act, 1961. The ITO withdrew the development rebate in all the three years to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was of the view that in such situation the investment allowance can be withdrawn. On the facts he held that there was transfer of asset on the dissolution of the firm and the ITO was justified in withdrawing the investment allowance. 4. It has been submitted before us that the AAC has not appreciated the factual position as well as the position in law. It was contended that the firm was dissolved by a deed of dissolution dt.10th April, 1980which became effective from31st March, 1980. This dissolution deed while dissolving the firm decided that the final account of the partnership had been made and the share of each party had been determined. It was also indicated that machineries having a written down value of Rs. 1,72,437 was to be allot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fer of an asset when a partner brings that asset as his contribution to the partnership. What has to be determined in this case is the effect of dissolution of the firm on the distribution of machinery between the partners. It is not a case where the machinery has been distributed only to some of the partners to the exclusion of others. The transfer has been made as per agreement and the adjustment have been made as per partnership deed and in the profit sharing ratio of the partners. 6. It has been held by the Supreme Court in the case of Malabar Fisheries Co. vs. CIT (1979) 12 CTR (SC) 415 : (1979) 120 ITR 49 (SC) that there is no transfer of asset involved even in the sense of any extinguishment of the firm s right in the partnership a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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