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TMI Blog1998 (11) TMI 119X X X X Extracts X X X X X X X X Extracts X X X X ..... te of dissolution of the old firm for purposes of calculating depreciation for the period relevant to the assessment years 1982-83 to 1986-87 ? (2) Whether, on the facts and circumstances of the case, the learned Income-tax Appellate Tribunal, Delhi Bench-A, New Delhi, was correct in holding that for purposes of working out profit on the sale of flats adjusted value as worked out at the time of dissolution of the firm and reflected in the capital account of the partners of the newly constituted firm would form the basis for the period under consideration ? (3) Whether, on the facts and circumstances of the case, the Income-tax Appellate Tribunal, Delhi Bench A, New Delhi, was justified in holding that surplus on the sale of showrooms wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eed of partnership (for the new firm), were executed on the same day. Various assets and liabilities of the erstwhile firm were revalued for the purpose of distribution amongst the partners. The multi-storeyed building was valued at a price mutually agreed upon by the partners inter se. What was distributed to the partners was ploughed back as capital of the partners contributed in the new firm at the same valuation at which it was distributed in the final accounts of the previous firm. Incidentally, it may be noted that till March 17, 1979, stock-in-trade was valued by the then firm as per book value, i.e., the actual cost of land plus the total amount spent on construction. The valuation agreed upon between the partners by mutual consent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... record go to show that for the assessment year 1980-81, the assessee filed one single return in accordance with the provisions of section 187 of the Act. The profit and loss account and the balance-sheet were prepared for two blocks, i.e., January 1, 1978, to March 17, 1979 and March 18, 1979 to October 31, 1979. The assessee had himself recorded the case to be one of change in the constitution of the old firm and not a case of dissolution and constitution of a new firm. What had taken place on March 17, 1979, was a mere change in the constitution of the firm. This is additionally borne out from a fact and a circumstance. The fact is that on June 29, 1983, the Income-tax Officer has passed an order under section 185 read with sections 184( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal. Counsel for the Revenue submitted placing reliance on the Supreme Court decision in A. L. A. Firm v. CIT [1991] 189 ITR 285, that the principle of valuing the closing stock of a business at cost or market price at the option of the assessee was not final and binding on the Revenue. It was also submitted, placing reliance on Saharanpur Electric Supply Co. Ltd. v. CIT [1992] 194 ITR 294 (SC) page 305, that for the purpose of working out the written down value of an asset the Assessing Officer must determine its actual cost and he was not bound by the cost computed for the purpose of previous year. Learned counsel for the Revenue also submitted that in tax matters the principle of res judicata did not strictly apply and did not opera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the order of the Tribunal. Once these tests are satisfied which way the questions will be ultimately answered cannot be of much relevance at this stage. Having gone through the record and having appreciated the suggested questions in the light of the submissions of learned counsel for the parties, we are of the opinion that the suggested questions do arise as questions of law from the order of the Tribunal. Still we are of the opinion that the suggested questions as framed do not reflect the crux of the controversy and the questions need to be recast. We do so by refraining and setting out the questions in the operative part of this order. The petition is allowed. The Tribunal shall draw up a statement in the case and refer the foll ..... X X X X Extracts X X X X X X X X Extracts X X X X
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