D. S. BIST & SONS, NAINITAL vs COMMISSIONER OF INCOME TAX, DELHI CENTRAL, NEWDELHI

The Supreme Court held that under the second proviso to Section 10(2)(vii) of the Income Tax Act, 1922, a balancing charge cannot be imposed on the appellant firm since the written down value of the trucks was nil at the time of transfer from the Hindu Undivided Family (HUF). The Court clarified that a firm is a distinct assessable entity under Section 2 of the Income Tax Act, and the depreciation allowance granted to the HUF does not apply to the firm. Consequently, the appeal was allowed, and the earlier decisions of the Income Tax authorities were set aside.