9911796707
TMI Blog1986 (1) TMI 182X X X X Extracts X X X X X X X X Extracts X X X X ..... the above referred appeals, and following the earlier orders in the above appeals we hold that the AAC has rightly held that the business of Maliram Puranmal satisfied the conditions of an industrial undertaking under s. 5 (1) (xxxii) of the Act. 3. The next ground is against he deletion of Rs. 3,06,280 which had been added by the WTO under r. 2B (2) of the WT Rules by valuing the closing stock of the firm Maliram Puranmal at market value as provided under the rules. The WTO had found that in the case of Maliram Puranmal a gross profit rate of 22% had been declared and the value of the closing stock was shown at Rs. 32,57,708. The WTO asked the assessee to show cause why the provisions of r. 2B (2) should not be applied and appropriate addition should not be made in the case of the assessee. To this the assessee sent a reply in the following terms: "That the gross profit during the said years was more than 20% It does not mean fair market value of the closing stock was more by 20% of the book value. We may mention that the jewellery trade has its own special feature. Goods may remain in stock for years together and may not be saleable at all. Some goods may be sold at 10% prof ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the WTO to let him know the material in his possession so that he may be able to rebut the same. We have also indicated in our consolidated order that certain specific facts had to be gathered by the WTO and he had to analyse them before he came to definite conclusion that the market value was in excess by a stipulated margin. We do not propose to repeat the arguments in the present order and we uphold the order of the AAC in this regard. 6. The last ground in this appeal is against the exemption under/s. 5(1) (iv) respect of the assessee s share of immovable property owned by the firm Maliram Puranmal. The WTO while including the assessee s share in the above property did not allow exemption under s. 5(1) (iv). 7. When the matter came before the AAC he considered the question of valuation of this property and found that the firm had shown its value at Rs. 1,04,829. the WTO had determined value at Rs. 1,54,000 as per the report of the its valuation officer. The above value had been determined by the valuer on the basis of a multiple to 20. This was considered to be excessive in earlier years and it was held that 12 times value should have been taken, On the basis of the earlie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the firm by grant of exemption in the firm s hand, Thus the assessee can get an exemption of the amount more than what is provided in the WT Act. As far as the decision of the Madras High Court in the case of Purshotham Das Gokul Das is concerned we find that this decision was noted by the Special Bench reffered to above. While doing so the Special Bench referred to the decision of the Madras High Court in the case of CIT vs. V. K. Saraswathi Ammal. (1981) 127 ITR 404 (Mad) which had held that here a property is owned by the firm it can still be said that it was owned by the partners. Where the High Court have taken different views it is open to us to take one view and we prefer to follow the view which confirms to the view taken by the Special Bench. In this connection we may refer to the letter decision of the Calcutta High Court in the case of CWT vs. Sri Naurangrai Agarwal (1985) 155 ITR 752 (Cal) and another case of CWT vs. Meera Mehta (1985) 155 ITR 765 (Cal). IN these decision the Calcutta High Court has held that a partner can claim exemption under s. 5(1) (iv). in respect of the property belonging to the firm in which the partner has a share. While preferring the view that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cepted the proposition that the rules for determing the value of the interest of the assessee in the firms of which they are the partners i.e., r. 2, including rr. 2A to 2G would be applicable no doubt they have concluded that r. 2B (2) does not apply because according to them the difference between the market value and the book value of the closing stock is not more than 20% However, the application of these rules otherwise has never been disputed and there can be possibly no dispute over it. Now according to r. 2 the net wealth of the firm or the AOP of which the assessee is a partner or Member has to be first determined. The words "net wealth" have been defined in cl. (m) as the value of assets required to be included in the net wealth of as assessee subject to certain deductions. Again under s. 5 certain assets are not to be included in the net wealth of an assessee so that while computing the net wealth of the firm necessary exemptions would have to be granted to it. This is further obvious from the language or rr. 2A to 2G For example under cl. (c) or r. 2D the value of any asst in respect of which the WT is not payable under the Act is to be excluded from the assets even if ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
