9911796707
TMI Blog1979 (4) TMI 84X X X X Extracts X X X X X X X X Extracts X X X X ..... , a company incorporated under the Companies Act, in March, 1973, comprising the partners of the assessee-firm as shareholders. For asst. year 1974 under appeal the assessee claimed depreciation of Rs. 80,450 which claim was rejected by the ITO as under "In as much as the machineries etc. Were sold during the year, the assessee is not entitled to any depreciation as provided in Act. When this was pointed out to the representative he has stated that even though he is not eligible for the normal depreciation provided in the Act, the difference between the sale price and the written down value has to be allowed as balancing depreciation under s. 32(1)(iii) of the Act. I am unable to accept this contention inasmuch as the sale price is a fic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cision of the Supreme Court overrides that in Chittor Transport Co. (P) Ltd. vs. ITO. The definition of sale equalling exchange cited by the representative has been given under the accessibility of balancing charge under s. 41(2). No doubt the wordings in ss. 32(1)(iii) 41(2) are similar and therefore the interpretations outht not to differ widely. But here are cases decided by the Supreme Court itself, 66 ITR page 725 72 ITR page 603, where different conclusions have been made on the word 'sale'. Since there is a Supreme Court decision directly available on the point i.e., a definition of 'sale' for the purposes of s. 32(1)(Iii), I see no reason to adopt the decision cited by the appellant which applies to the provisions of s. 41(2)." ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itors M/s. P.B. Vijayaraghavan Co. The net worth was determined by the above Chartered Accountants at Rs.2,39,586.03, being the excess of the assts of Rs. 27,37,514.84 over the liabilities of Rs. 24,97,928.81. The above gross assets of Rs.27,37,514.84 included the value of fixed assts comprising buildings, plant and machinery etc. Valued at Rs. 4,74,652 arrived at as under:- Written down value as on 1-4-1973. Rs. 5,02,641 Additions from 1-4-1973 to 30-6-1973. Rs. 52,461 . Rs. 5,55,102 Less: Depreciation Rs. 69,514 . Extra sift . allowance. Rs. 10,396 Rs. 80,450 W. D. vs. As on 30-6-1973 Rs. 4,74,652 Under clause 6 of the agree ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court decision in Hazarimal Nagji Co.(5). 3. We have considered the rival submissions. The AAC has upheld the ITO order on the narrow ground that the transaction involved in one of "exchange" since the assessee has been allotted shares in lieu of the assets in the partnership. This observation does not appear to be correct since, as would appear from clause 6 of the sale deed, only Rs. 98,000 was allotted by way of shares and the balance of the net worth was to be given by way of debentures or by cash. Secondly, the AAC has fallen into an error in applying the Supreme Court decision, without noticing the fact that under the 1961 Act, which governs the present appeal, the definition of "sale" in Explanation (2) to sec. 32(1) also in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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