Case Law Details
Rajarathnam’s Jewels Vs ACIT (ITAT Bangalore)
ITAT Bangalore held that the deposit of gold jewellery by family members of a partner in the partnership firm would be treated as the stock in trade of the firm as agreement between the firm and the partners provides that the jewellery given by the partner can be used by the firm and sold by the firm.
Facts-
There was a survey conducted under section 133A of the Act by the Revenue on 16.03.2001 in the business premises of the assessee. Accordingly, stock of 1358.73 gms of gold and diamond jewellery was found. It was explained that the gold and diamond jewellery of 16,3063 gms and 1,013 gms belonged to the partner’s family members.
The assessee also explained that the deposit was based on the deed that the jewellery should be returned when demanded and the fee was also charged by the family members. This explanation was accepted but rejected in the second survey conducted in 2012. The assessing officer treated the deposit as stock in trade of the firm and an additional income was added.
Please become a member. If you are already a member, login here to access the full content.