ASMACO Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) BY this reference made under S. 256(1) of the IT Act, 1961 at the instance of the assessee, the Tribunal has referred the following question of law to this Court for opinion :

(2.) THE assessee firm was constituted under the Deed of Partnership dt. 20th Oct., 1969 consisting of two partners, viz., (i) Husainbhai Ahmedali Nalwala, and (ii) Aftabbhai Nalwala. The business activities of the assessee firm were two fold i.e. purchasing and reselling of plastic cloth and manufacturing of different kinds of plastic cloth in the firm name and style of M/s Asmaco, having the factory at Thane. Under a Deed of Partnership dt. 14th Nov., 1975, a partnership firm comprising of the said Husainbhai Ahmedali Nalwala, the said Aftabbhai Nalwala and one H.A. Nalwala Family Trust as partners therein was constituted in the firm name and style of M/s Asmaco Plastic Industries on the terms and conditions contained therein. The business of the partnership constituted in the firm name and style of M/s Asmaco Plastic Industries commenced from 4th Nov., 1974 and all the assets and liabilities of the assessee firm were taken over and vested in the partnership constituted to carry on business in the firm name and style of M/s Asmaco Plastic Industries on and from 4th Nov., 1975. The firm of M/s Asmaco Plastic Industries carried on business of manufacturing plastic cloth.

(3.) MR . Bhujle, learned counsel appearing for the assessee firm, has submitted that the assessee firm did not sell or otherwise transfer the machineries on which the development rebate of Rs. 50,305 was initially allowed by the ITO in the asst. year 1975 76 within the meaning of S. 34(3)(b) of the Act and that the firm of M/s Asmaco Plastic Industries is not a new firm but an another unit of the assessee firm with an additional partner and as such the development rebate granted as aforesaid, has been wrongly withdrawn.