RAJ NARAIN AGGARWAL Vs. INCOME TAX COMMISSIONER DELHI

JUDGEMENT

(1.) The following two questions of law have been referred to this Court under section 66(1) of the Indian Income-tax Act, 1922 :-

(2.) The statement of case relates to the assessment year 1956-57 (previsous year ending 31-12-55). The assessee is a Hindu undivided family. A partnersip firm was constituted in the name of Prem Narain Raj Narain by a written instrument dated 1-1-1944 between two brothers Raj Narain and Prem Narain, each acting as a Karta of his Hindu undivided family. The said partnership owned three factories, namely (1) Prag Distilled Water Ice Factory, (2) Prag Cold Storage, and (3) Prem Raj Enamel Metal Factory. The firm carried on business up to January 1, 1955. Prag Distilled Water Ice Factory and Prag Cold Storage suffered losses of Rs. 2,12,027.00 and Rs. 1,02,481.00 respectively up to the end of the assessment year 1955-56 which were carried forward loss was Rs. 3,53,838.00 in the assessment of the said registered partnership for the assessment year 1955-56 comprising of Rs. 3,14,508.00 in the aforementioned two factories and Rs. 39, 330.00 in Prem Raj Enamel Metal Factory. This loss was allocated equally between the two partners so that the carried forward loss in the hands of each partner was Rs. 1,76,919.00. The partnership firm was dissolved on January 1, 1955. On the same date, the three factories were valued by the partners with the help of experts and divided into two lots. The lot comprising Prag Distilled Water Ice Factory as a going concern together with its assets and liabilities except goodwill and land and Prag Cold Storage also as a going concern together with its assets and liabilities excepting godwill and land fell to the share of the assessee. The value of these assets was determined at Rs. 6,20,000.00. As the assets falling to the share of the assessee exceeded in value of the lot taken by Prem Narain, the assessee paid a sum of Rs. 4,35,000.00 for equalising the values of the divided assets. Regarding valuation and division of the assets, the Tribunal observed-

(3.) Even apart from this having regard to the written down value of these factories in the case of the firm coupled with the present times when the prices of plant and machinery have gone up many fold, we have not in the least any doubt that Rs. 6 Lac was the fair and reasonable value of the two factories on 1-1-65."