Law: Income Tax Act, 1961

Section: 256

(a) Income-tax-----Reference---Firm---Deduction---Sales tax---Dissolution of firm---Assets and liabilities of firm taken over by one of its partners---Sales tax liability discharged by that partner---Firm whether should be deemed to continue till discharge of liability---Sales tax whether deductible in hands of firm--¬Question of law---Indian Income Tax Act, 1961, S.256. (b) Income-tax--- ----Reference---Firm---Valuation of stock---Dissolution of firm---Question regarding valuation of closing stock---Question of law---Indian Income Tax Act, 1961, S.256. The assessee was a firm. During the previous year ending on December 31, 1986, it had collected sales tax of Rs.1,19,031 which remained unpaid on the last date. The firm continued its business till January 12, 1987, and was dissolved on that date. The assessee-firm for the assessment year 1988-89 claimed deduction of the above amounts of Rs.1,19,031 and Rs.61,272 which were paid after dissolution by a company D, one of the partners of the dissolved firm. The claim was disallowed by the Assessing Officer and the Commissioner of Income-tax (Appeals). Before the Tribunal it was submitted on behalf of the assessee that the sales tax liability was a statutory liability and continued to be its liability until it was discharged. It was further submitted that in spite of the firm having been dissolved on January 12, 1987, for the purpose of winding up it had to be understood to have continued thereafter in view of the position of law. Moreover, the facts on record showed that on dissolution the private limited company which was itself a partner of the assessee-firm in question had taken over the assets and liabilities. The remaining two partners of the assessee-firm on settlement of their accounts had received their share after deducting the statutory liability. The Tribunal deleted the disallowance. Before the Assessing Officer, regarding the valuation of the closing stock-in¬-trade, the assessee was unable to furnish the market rate or price with regard to these items. The Assessing Officer estimated the market rate or price by adding a gross profit of ten percent to the cost admitted and thereby made addition of…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492