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TMI Blog1990 (4) TMI 114X X X X Extracts X X X X X X X X Extracts X X X X ..... aid. 4. According to the Commissioner, these amounts should have been assessed to tax in the respective assessment years and since they were not brought to tax, the assessments as made were prejudicial to the Revenue and he, therefore, invoked his powers under sec. 263 and issued a show-cause notice. In brief, according to the assessee, the provisions of the Act did not warrant taxing either of these amounts because the provisions of sec. 41(1) of the Act were not attracted nor the provisions of sec. 176(3A) and the assessee as an individual was not liable to pay tax on these amounts. 5. As there was some confusion regarding the facts and since the case was very closely argued on behalf of the assessee as well as on behalf of the Revenue, it was considered necessary to ascertain certain facts and accordingly we passed a Remand Order dated 11th August, 1989. Subsequent to this, a Remand Report was received dated 2-1-1990. As the said Remand Report was not was not fully clarificatory, certain further information was sought and the final Remand Report received was dated 15-3-1990. Both these Remand Reports were made available to the assessee. 6. To appreciate the contentions, we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncluding use of trade name and right to licence, quota rights and prosecution of appeal shall belong to the party of the first part hereto and other partners shall not have any rights in the same and they shall not use trade name of the firm and shall not claim anything more than mentioned in para 9. The party of the first part therein shall be entitled to continue and carry on the said business in any manner he might choose. The further facts to be stated are that the amount of Rs. 7,65,802 which had been received as customs duty refund represented refund of customs duty which had been paid by the firm when it was carrying on business. 9. The refund of customs duty of Rs. 14, 316 was refund of customs duty paid by Meghraj as individual when he was carrying on business in his individual capacity in the period 15-1-1969 to 27-10-1973. The issues before us are whether amount of Rs. 7,65,802 is assessable in the year 1983-84 in the hands of Meghraj Jesraj individual and whether Rs. 14,316 is assessable in the hands of Meghraj Jesraj individual in the assessment year 1984-85. 10. The Commissioner in his order u/s. 263, which is common for both the years, has made a reference to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were not applicable because on allowance should have been made in the hands of the same assessee earlier and it is only where a refund was received by the same assessee the amount could be brought to tax. He stated that it has now been definitely ascertained that the amount of Rs. 7,65,802 had been paid by the firm. The refund had been received by Meghraj individual. The firm and the individual were different assessees and the provisions of sec. 41(1) were not attracted. 13. We have heard the learned Departmental Representative on this point. We agree with the learned counsel for the assessee that since it has been factually found that the amount of Rs. 7,65,802 had been paid by the firm and the refund had been received by the assessee as individual, the cardinal requirement of sec. 41(1) is not satisfied and, therefore, the amount of Rs. 7,65,802 cannot be brought to tax in the assessment year 1983-84 under the provisions of sec. 41(1). 14. Coming to the provisions of sec. 176(3A), the learned counsel placed considerable stress on the decision of the Supreme Court in the case of CIT v. Kirkend Coal Co. [1960] 74 ITR 67. He submitted that the provisions applied only to cases of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the firm on dates much prior to the dissolution of the firm, i.e., in February 1977 and in March 1977, whereas the firm dissolved only in April 1977. His argument was that when the plant with which the firm had carried on business, namely, manufacture and sale of stainless steel articles, had been purchased by the assessee, the firm could not have continued its business. Further he submitted that there was no closing stock whatsoever which the assessee took over when the firm dissolved on 30-4-1977. Therefore, if the entire infrastructure had been purchased earlier and there was no closing stock taken over on dissolution, he submitted, that this was a case where the firm had not only dissolved but the business of the firm had been discontinued and, therefore, the provisions of sec. 176(3A) were clearly attracted. 17. We have considered the rival submissions. We are in complete agreement with the learned counsel for the assessee that dissolution of a firm does not necessarily imply discontinuance of the business. Whether there has been discontinuance or not of the business has to be separately determined. Every change in ownership does not amount to discontinuance of business. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... last provision is satisfied. We find it is satisfied because if the firm had not discontinued the business and the amount had been received, then because the amount of Rs. 7,65,802 had been paid by the firm earlier and remission had been obtained in respect the same, the amount would have been included in the total income of the firm under the provi sions of sec. 41(1). Therefore in our view, the provisions of sec. 176(3A) are satisfied and as far as the assessment year 1983-84 is concerned, the amount of Rs. 7,65,802 has rightly to be subjected to tax. 19. The order of the Commissioner of Income-tax is that this amount should be subjected to tax in the fresh assessment which is to be done in accordance with law, he having set aside the assessment. Our finding is confined only to the taxability of the amount of Rs. 7,65,802 in the fresh assessment which is to be made. As far as all other aspects are concerned, they do not arise for our consideration. 20. Coming to the assessment year 1984-85, the amount of Rs. 14,316 had been paid by the assessee in his individual capacity when he was carrying on the business between 15-1-1969 to 27-10-1973. The amount had been received back b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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