9911796707
TMI Blog1991 (4) TMI 194X X X X Extracts X X X X X X X X Extracts X X X X ..... ers. On 12-9-1980 the firm was dissolved and the entire business, as a going concern, was taken over by the company. In settling the accounts the other partners were granted shares in the company to the extent of the amount due to them on the basis of book value of assets and liabilities. In the assessment of the firm for the assessment year 1981-82, corresponding to the accounting period ended 11-9-1980, the value of closing stock shown in the books was substituted by the market value. The firm contested this revision of the value of the closing stock but ultimately the Appellate Tribunal by order dated 10-7-1986 in I.T.A. No. 1883/Mds/85 confirmed the revision while directing the ITO to re-work the market value of the stock. It is stated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the rival submissions, we are of the opinion that the revision sought for by the assessee cannot be allowed on the facts of this case. The assessee is a successor to the business originally held by the firm. In the case of the firm the value of the closing stock had been substituted by the market value by following the decision of the Madras High Court in the case of AL.A. Firm v. CIT [1976] 102 ITR 622. That decision has been upheld by the Supreme Court in 93 CTR 133. In that case the partners had themselves agreed in settling their accounts to substitute the market value instead of the book value for the closing stock. But in computing the income from the business as on the date of dissolution it was claimed that no such substitution shou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly when it is less than cost ; it is not quite certain whether the rules permit an assessee if he so desires to value closing stock at market value where it is higher than cost. But, in either event, it is allowed to be done because its effect, can be offset over a period of time. But here, where the business comes to a close, no future adjustment of an over or undervaluation is possible. In this context, it is difficult to see how valuation, at other than cost, can be justified on the principle of Ahmedabad Advance Mills ' case." In the light of the above observations of the Supreme Court even assuming that the business was continued without disruption by the company upon the dissolution of the firm, there can be no re-valuation of the c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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