COMMISSIONER OF INCOME TAX Vs. PURANMAL MANILAL

JUDGEMENT

(1.) THIS is a reference at the instance of the CIT in which the following question has been formulated for our decision :

(2.) THE facts of the case are very simple. The assessee was a firm consisting of two partners, Puranmal as representing one HUF, and Manilal as representing another HUF. The firm had acquired certain assets, including machinery, on which depreciation was being allowed in the assessments under S. 10(2)(vi) of the Act.

(3.) MR . Joshi has very fairly stated to us at the very outset of his arguments that, though the two decisions of this Court, the one in Sir Homi Mehta's Executor's case (supra) and the other in Rogers & Co.'s case (supra), relied upon by the Tribunal are, according to him, no longer good law in view of the decision of the Supreme Court in the case of CIT vs. B. M. Kharwar (1969) 72 ITR 603 (SC), if we take the view that the taking over of the assets by Manilal was part of the transaction of dissolution, the matter is now concluded by two other later decisions of the Supreme Court, one in the case of CIT vs. Dewas Cine Corporation (1968) 68 ITR 240 (SC), and the other in the case of CIT vs. Bankey Lal Vaidya (1971) 79 ITR 594 (SC). According to Mr. Joshi, the question as to whether or not the taking over of the assets by Manilal was part of the transaction of dissolution must be determined only on a construction of the deeds of dissolution and release. I do not agree with Mr. Joshi that the question as to whether the taking over the assets by Manilal was part of the transaction of dissolution has to be determined only on a construction of those documents. In my opinion, that question is a question of fact in regard to what transpired in the course of the transaction resulting in the dissolution of the firm, and, as such, it must be regarded as concluded by the Tribunal's finding. Once the legal aspect of the question is, therefore, also concluded, as it is by the decisions of the Supreme Court in Dewas Cine Corporation's case (supra) and Bankey Lal Vaidya's case (supra), the question referred to us on this reference must, in my opinion, be answered against the Revenue.