Goel Udyog, vs Department Of Income Tax
The second
judgment is of Hon'ble Madhya Pradesh High Court rendered in the case of CIT
v. Nathulal Jawarchand (supra).
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Commissioner Of Income-Tax vs Nathulal Jawarchand on 25 June, 1996
Sagar Tyre House vs Ito on 6 November, 2002
7. In the appeal before us, the learned counsel of the assessee argued before us that the firm was dissolved on 31-3-1992, and the same business was continued even after 31-3-1992, in the assessment year. The firm was dissolved and the ex-partner, Smt. Jain, has taken over the business assets and liabilities and continued the same business. As such, when there was dissolution of firm but continuation of the business, there is no necessity to value the stock on market price when there was no sale of the stock at the time of dissolution of firm. The stock was valued as per practice adopted during many previous years hence the decision of Hon'ble Supreme Court in case of A.L.A. Firm v. CIT (supra) does not apply and also the decision of the Hon'ble MP High Court in case of CIT v. Nathulal Jawaharchand (supra) where the Hon'ble MP High Court has considered the above decision of the Hon'ble Supreme Court, also does not apply as the facts of the present case are different from the facts in cases mentioned above.
The Asstt. Commr. Of Income-Tax vs Kuldip Chand And Sons on 1 December, 2004
3.1. Briefly stated, the facts of the case are that the assessee-firm was dealing in purchase and sale of gold and silver ornaments. Due to the death of one of the partners, namely, Shri Kuldip Chand, the firm was dissolved on 25.2.1997 and thereafter, the business was taken over by the sole remaining partner, Shri Varinder Kumar in his individual capacity as sole proprietor. The assessed had shown valuation of closing stock of gold at Rs. 1326403/- and that of silver at Rs. 92903/- on 25.2.1997. The AO called upon the assessee to explain the reasons as to why the closing stock be not valued at market price in view of the decision in the case of CIT v. Nathu Lal Jawarchand (1997) 227-ITR-251(MP) which in turn is based on A.L.A. Finn v. CIT (1991) 189-ITR-28S(SC). It was contended on behalf of the assessee that it was regularly valuing its closing stock by taking average price according to its true worth and the name method was followed in the instant year. It was opined by the AO that the stock was required to be valued at market price. On the instructions of the AO, the assessee computed the market rate of gold ornaments at Rs. 397/- per grain as on the closing day. The AO, however, made certain changes and calculated the market price as on the day of dissolution at Rs. 455/- per gram. Apart from others, the assessee had included labour charges @ Rs. 10/- per gram whereas the AO considered this amount at Rs. 15/- per gram. Similarly, the value of the silver ornaments in the closing stock was adopted by the AO @ Rs. 6.40 per gm. as against Rs. 4.53 per gm. computed by the assesses as the market rate of silver ornaments as on the closing day. Accordingly, an addition of Rs. 1,56,431/-was made on account of the difference in the valuation of gold ornaments and Rs. 43,716/- on account of difference in the valuation of silver ornaments. In the first appeal, the learned CIT (A) allowed partial relief in the value of the gold ornaments by holding that the labour charges should be considered at Rs. 10/- par gm. This resulted into relief of Rs. 16,295/- in the valuation of closing stock of gold, against which the Revenue is aggrieved through its ground. No relief was allowed in the valuation of the closing stock of silver ornaments against which the assessee is aggrieved in the present appeal along with the addition in the valuation of gold jewellery sustained in the first appeal.
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