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; The two-Judge Bench took note of the observations made in the said case which was to the effect that while exercising the power under Section 311 of CrPC, the court shall not use such power for filling up the lacuna left by the prosecution. Because if regard be had to the various fluctuations in the market value which have been reflected in the accounts of the intermediate period, what the business actually gains or loses would be the difference between the cost price of the asset when it was brought in and the price at which it was sold when it was actually realised.
46) The argument of learned counsel was that any dispute relating to the management and affairs of the Trust including the disputes inter se trustees and the beneficiaries in relation to the Trust, its affairs, management and properties cannot be decided by the arbitrator under the Act even though there may be a clause to that effect in the Deed. It was urged that the withdrawal of the asset from the stock-in-trade of the business was not a business operation and that an entry on the credit side crediting the cost price of the particular asset would therefore be enough.
In the course of the business however the asset appreciates or depreciates in value in accordance with the fluctuations of the market. The only advantage which the assessee obtains would be that he would be able to anticipate in a particular year the loss that may be made on the asset in the following year or years, which however might have to be rectified in the following year or years if the prices rose again.
So far as the business itself is concerned the asset which has been brought in is of a particular value at the date when it has been so brought in and it is then valued in the books of account at its cost. It was his submission that the remedy to get such disputes decided through arbitration is impliedly barred, if not, expressly by virtue of the scheme and the elaborate provisions of the Trust Act.
If however the market value basis is adopted for such Valuation, the asset on being valued at the market rate thereof at the close of the year might show a loss and this loss would be allowed by the Income-tax authorities in computing the profit or loss of the business. When the asset is realised the assessee would have to show the actual price realised by the sale of the asset in the books of account and the difference between the price thus realised and the value shown in the beginning of the year of account would be the profit or loss as the case may be, in regard to that asset and that profit or loss 31 230 would be allowed by the Income-tax authorities in the computation of profit or loss for that year of account.
On the other hand, the market value basis would bring into account each year the fluctuations in the market value of the asset as at the close of every year of account until the asset was NRI Legal Services
realised with the result that in each and every year of account a rectification would have to be made in the result of the trading of the previous year which was not correctly reflected in the accounts by reason of the assessee having adopted the market value obtaining at the close of the previous NRI Legal Services
year as the value of the asset.
The adoption of the one or the other basis of valuation would not however make any difference in the ultimate result. Learned counsel pointed out that the Trust Act is a complete Code in itself and provides a comprehensive machinery to deal with all issues relating to Trust, the trustees and the beneficiaries including providing adequate forum (Civil Court) for adjudication of all such disputes arising between them and the Trust, and hence, the jurisdiction of the Civil Court should be given overriding effect to the exclusion of jurisdiction of private arbitration under the Act by applying implied bar of jurisdiction recognized in law.
This process of rectification would continue from' year to year until the asset was realised in a particular year of account when the actual price realised on the sale of the asset would be brought into account in that year. Narcotic Cell occasion arose to appreciate the principles stated in Mohanlal Shamji Soni (supra). On the cost price basis of valuation all intermediate fluctuations of price during the interval between the bringing of the I asset in the business and the realisation of it would be eliminated and the only thing considered in the accounts would be the difference between the price of the asset when it was brought into the business and the price thereof when the asset was realised.
The ultimate result of these operations so far as the asset itself is concerned would be no different. In either event, the assessee would have to carry over the asset in the books of account of the subsequent year at the valuation adopted at the close of the previous year and the assessee would not be allowed to change the basis of valuation thus adopted unless he chose to adopt at the end of the subsequent year or years valuation at the cost price or the market value thereof whichever was lower.
This process would continue until the asset is realised. If the cost price basis is adopted for the valuation of the stock-in-trade at the close of the year this appreciation or depreciation in the value as the case may be would not be reflected in the accounts.