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TMI Blog1988 (10) TMI 84X X X X Extracts X X X X X X X X Extracts X X X X ..... ar under review, by means of release deed drawn up on 3rd Jan., 1983, Smt. Jasbir Kaur retired from the firm on 15th Dec., 1982 and released the business along with all its assets and the business in favour of the other partner Shri Gurcharan Singh, thereby Shri Gurcharan Singh became the sole-proprietor of the business from 11th Dec., 1982 Shri Gurcharan Singh took over all the assets including the stock as on 15th Dec., 1982 at the value appearing in the Balance Sheet on 15th Dec., 1982. The firm had as per its usual practice valued the stock on hand at cost and this value was Rs. 1,21,465. The ITO accepted this value of the stock on hand on the date of dissolution and had completed the assessment on 28th June, 1984. 1.3. The CIT invoke ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceives is only his interest in the property of the firm in which he was interested all through its existence. He cited the decision of the Supreme Courts in support of this contentions, viz., CIT vs. Hind Construction Ltd. (1974) CTR (SC) 157 : (1972) 83 ITR 211 (SC) and Malabar Fisheries vs. CIT (1979) 12 CTR 415 : (1979) 120 ITR 49 (SC). He also places reliance on the other Supreme Court ruling in the case of Sunil Siddarthbhai vs. CIT, for the proposition that the partner only receives his accumulated interest at the time of dissolution, thereby there can be no element of any transfer. He also cited Addl. CIT vs. Brahm Swaroop Bros. (1987) 163 ITR 321 (Raj) : 24 ITR 326 (sic); CIT vs. Calcutta Discount Co. Ltd. (1973) CTR (SC) 425 : (1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T dt. 17th Feb., 1987, is clearly barred by time. 3. The plea of the learned Departmental Representative Shri Vig was that the amendment to the s. 263 was only clarificatory and therefore, he could have passed his order any time before 31st March, 1987, and since he had passed his order on 17th Feb., 1987, the order is well within time. 3.1. On merits he placed that the rulings relied upon by the CIT are directly on the issue of the instant case, and there being no contrary ruling, by virtue of the Bombay High Court ruling in the case of CIT vs. Godavari Devi Saraf (1978) 113 ITR 589 (Bom), the pronouncement of the High Courts shall have a binding force on all the lower Courts. 4. We have given our very careful considerations to the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liance on the Gujarat High Court ruling in the case of CIT vs. Keshavlal Chandulal (1966) 59 ITR 120 (Guj) in coming to the conclusion that the stocks of a dissolved firm must be vlaued at the market price only, to determine the true trading results. 4.2. The ruling of the Kerala High Court in the case of Popular Workshop vs. CIT, was also concerned with the identical question of valuation of the stocks on hand on dissolution of the firm. They had placed reliance on the Madras High Court rulings and after referring to the Supreme Court ruling in the Sunil Siddarthabhai came to conclude that even by virtue of this ruling of the Supreme Court, the only probable conclusion that could be arrived at is that the closing stock on hand of the dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... od prior to 1st Oct., 1984. The Courts have always held that all beneficial additions or explanations, intended to clarify the intention of the section only could be held to be operative retrospectively while any such explanations intended to enlarge the scope of authority of the administrator should always be operative prospectively. Perhaps the conclusion so arrived at was due to the fact of what could not have been done earlier due to absence of any enactment, could not be said to be permissible by a subsequent explanation even stating therein that it was only for clarification. The Board had issued a Circular No. 402 dt. 1st Nov., 1984 wherein also it was opined by them that "However, with a view to avoiding controversy and litigation i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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