9911796707
TMI Blog1996 (9) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... tes that there is a dissolution of the assessee-firm and it was consequent upon the transfer of the business to a limited company and it is upon these factual postulates the question poses a problem as to whether or not it was not necessary to value the stock as per their market value. We have been taken through all the three orders, to reveal that these are not the factual postulates which are the basis of the question posed before us. However, the factual postulates are quite contrary. The assessee gets concerned for the assessment year 1981-82 for a very limited period, from April 1, 1980, up to May 31, 1980. The assessment was completed on September 13, 1980, with reference to a total income of Rs. 43,630 on acceptance of the inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on July 20, 1982 1502 2,254 ------------------------------------------------- Balance 35,576 Interest u/s. 139(8) for 11 months 12,034 ------------------ 47,610 Less : Tax paid on 30.7.82 1,143 ------------------ Balance tax due 46,467 ------------------ It would be seen that thus resorting to the process of valuation at the market price an amount of Rs. 46,467 is shown as the balance amount of due tax. Further travel of the proceedings before the first appellate authority---Commissioner of Income-tax (Appeals), Trivandrum, gave success to the assessee. The first appellate authority has observed that the Income-tax Officer carefully overlooked the position in relation to the activities that are undisputed. The first ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edecessor shall be in respect of the income of the previous year in which the succession took place up to the date of succession. As a logical consequence, the first appellate authority has observed that the successor or the new person-in-charge of the business will have to be assessed in respect of the income of the previous year with reference to the date of succession. In reaching the above conclusion reliance is placed on the decision of the apex court in CIT v. K. H. Chambers [1965] 55 ITR 674 laying down some of the well accepted tests to infer continuation and/or succession, such as continuance of integrity, identity and continuity of business apart therefrom being a change, so called in ownership. Again, in the context of the fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see has got the option to value it at lower of cost or market price, in the event of dissolution it should be only at the market price. There can be no quarrel over this proposition. But in the case before us what has happened was that all the assets and liabilities of the firm were taken over by the company with the same persons as shareholders. Thus, this is a case of succession of business in entirety by another entity." The Tribunal has also clarified even a possible confusion by tersely observing that the intention of the partners in transferring the business to a private limited company was to change the form of organisation. In this context, the Tribunal has also referred to clause 3A of the memorandum of association of the company ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
