COMMISSIONER OF INCOME TAX Vs. UNITED TRADING COMPANY

JUDGEMENT

(1.) THE Income-tax Appellate Tribunal, Jaipur Bench, Jaipur, has referred the following question of law arising out of its order dated January 28, 1986, in respect of the assessment year 1982-83 under section 256(1) of the Income-tax Act, 1961 :

(2.) THE brief facts of the case are that the assessee-firm constituted with four partners out of whom two retired in the year 1959. During the period relevant to the assessment year 1982-83, certain properties were attached and sold by the Income-tax Department in public auction for recovery of outstanding tax arrears. THE factory building and its officer were disposed of for a sum of Rs. 5,72,000 on March 5, 1982. THE last assessment was completed in respect of the assessment year 1957-58 and thereafter no assessment was made as the business was discontinued. THE Income-tax Officer applied the provisions of section 189 and taxes the capital gains in the hands of the firm while the claim of the assessee was that the firm has been dissolved long time back and capital gains cannot be levied on the firm.