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TMI Blog1981 (10) TMI 68X X X X Extracts X X X X X X X X Extracts X X X X ..... ate on the machinery installed during the previous year relevant to the assessment year under appeal and used in its business prior to the dissolution of the firm? 4. The firm by the name and style of M/s. Ralson Industries, G.T.Road, Ludhiana, constituted of the following was in existence till 30th June, 1974: Smt. Prem Kumari 26.25% Smt Krishna Rani 26.25% Shri Satish Chander 17.5% Ralson Cycles Pvt. Ltd. 30% The previous year of the firm ended on 30th June, 1974. On 30th June, 1974, a deed of dissolution of partnership was drawn. In this deed, the parties, 1, 2 and 3 became as party of the one part and party No. 4 i.e. the private limited company became party of the oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laring an income of Rs. 26,905. This income was derived from manufacture and sale of cycle parts and tyres. The ITO completed the assessment on a total income of Rs. 1,21,790 vide his order u/s. 143(3) dt. 15th March, 1978 appearing at pages 4 and 5 of the assessee's paper book. In this agreement, the status was taken as unregistered firm, However, the ITO made an order of amendment u/s. 154/155 read with s. 185 on 31st March, 1978 i.e. about a fortnight after the first order and mentioned in the order of amendment that since the original documents were not traceable, a duplicate copy thereof has been obtained and placed on file and receipt of these documents has also been verified from the original receipt book. Since all the legal formali ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the return had been allowed and observed under: "The application is in time. Previously the assessee firm was constituted of three partners, namely Smt. Krishna Rani, Smt. Prem Kumari and Sh. Satish Chander, w.e.f. 1st April, 1974, "M/s. Ralson Cycles Pvt. Ltd. joined the partnership, which was subsequently dissolved on 30th June, 1974, as a result of which the company took over the business of the firm with all its assets and liabilities by paying to the outgoing partners their capital amount plus an amount of Rs. 6,00,000 as a consideration for goodwill and appreciation in value of assets etc. Previous year of the assessee for assessment year 1975-76 ended on 30th June, 1974 i.e. the day on which the assessee firm was dissolved and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Tribunal and thereafter the revenue did not go any further in that case. 10. The ld. counsel for the assessee strongly relied on the judgement of the Supreme Court in the case of Malabar Fisheries Co. (1979) 12 CTR (SC) 415 : (1979) 120 ITR 49 (SC) for the proposition that when there is dissolution of the firm and the assets and liabilities of the firm are taken by one of the partners of the concern which is dissolved there is no transfer involved and, therefore, the authorities below erred in considering that such a transfer was involved in this case on the basis of which the claim of depreciation and development rebate has been disallowed. 11. These submissions were opposed strongly by the revenue and it was contended that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shows that the transaction was that of adjustment of rights amongst the partners on retirement and dissolution of the firm. In fact, one of the partners i.e. the private limited company continued to take over the running business with all its rights and responsibilities as is clearly brought out in the clauses of the dissolution deed. When such a transaction takes place, it is now well settled, there is no transfer involved. If any authority was necessary, one has only to refer to the judgement of the Hon'ble Supreme Court in the case of Malabar Fisheries Co. (1979) 12 CTR (SC) 415 : (1979) 120 ITR 49 (SC). 15. Since there was no transfer and the assessee firm had otherwise complied with the provisions of law to entitle it to depreciati ..... X X X X Extracts X X X X X X X X Extracts X X X X
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