Law:

Section:

Section 256 of the Income-tax Act, 1961 - Reference - Res Judicata - Assessment years 1975-76 and 1976-77 - Whether plea of res judicata on general principles can be taken in respect of s High Court renders in a proceeding under section 256 provided decision pertains to an issue of fundamental nature - Held, yes Section 32, read with section 254, of the Income-tax Act, 1961 - Depreciation - Allowability of - Assessment years 1975-76 and 1976-77 - For assessment years 1973-74 and 1974-75 Tribunal had rejected case of assessee that though assets in question had been shown in books of account of firm as assets of firm, they must be deemed to be exclusive property of assessee by virtue of a clause in partnership agreement - Tribunal's finding was not disturbed by High Court - Whether for assessment years 1975-76 and 1976-77, Tribunal was justified in holding that assessee was owner of assets in question and not partnership firm - Held, no FACTS Till 1972-73 the assessee was the sole proprietor of a firm. On 17-5-1972 he entered into a partnership with his son. The partnership deed specified that the assets of the business would continue to be the exclusive property of the assessee. However, in the books of the firm all the assets and liabilities of the assessee in the firm as proprietor were treated as assets and liabilities of the firm. Not only that, the assessee had been given full credit for Rs. 1,52,560 in his capital accounts which was a figure brought forward from the books of the business carried as proprietary concern. These assets consisted of buildings, machineries, press, etc., which had been taken over by the firm at book value from the proprietary concern. For the assessment years 1973-74 and 1974-75 the Tribunal had rejected the case of the assessee that though these assets had been shown in the books of account of the firm as the assets of the firm, they must be deemed to be the exclusive property of the assessee by virtue of the aforesaid clause in the partnership agreement. The High Court refused to go into the correctness of the said finding as the question referred did not concern the said finding. For the assessment years 1975-76 and 1976-77,…

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