Sri Ramakrishna Tobacco Co. vs Commissioner of Income Tax

B.P. Jeevan Reddy, J.—The question sought to be referred herein is :

"Whether, on the facts and in the circumstances of the case, the honourable Income Tax Tribunal is justified in sustaining the addition by revaluing the closing stock at market price when a partner in a firm died and the business is run by the firm reconstituted on the death of the partner taking over assets and liabilities ?"

What happened is this : because of the death of a partner on November 2, 1983, the partnership stood dissolved. A new partnership wasentered into on the next day by the surviving partners. The legal representatives of the deceased partner were paid off. In the assessment proceedings for the assessment year 1984-85, two assessments were made, one on the previous firm up to November 2, 1983, and the other on the succeeding firm. (This is not a case of reconstitution - it is only a case where the business is succeeded to by a new firm). In the circumstances, the authorities were perfectly justified in valuing the closing stock of the previous firm at the market value. This view, consistently taken by the Madras High Court, has been followed by this court in V.C. Venkata Subbaiah Chetty and Sons Vs. Commissioner of Income Tax, . We see no question of law arising from the order of the Tribunal which requires to be referred for the opinion of this court. The Income Tax case is, accordingly, dismissed.