1. The following question has been, at the instance of the assessee, referred to us by the Income-tax Appellate Tribunal, Cochin Bench:

"Whether on the facts and circumstances of the case the closing stock should be valued at the market value as claimed by the department or at cost as claimed by the assessee for the purpose of determining its income for the assessment year under consideration?"

The assessee was a firm which was dissolved on 30-6-1971, when two of the five partners retired. The retiring partners were allowed to withdraw the closing stock valued at Rs.94,390.75. Their accounts were duly debited, On the next day, the remaining partners entered into a fresh partnership deed to carry on the same business as that of the dissolved firm For the assessment year 1972-73, which is the year in question, assessment was completed on the basis that the total income of the assessee-firm was Rs. 1,04,770/-. This was on the basis that the closing stock was correctly valued at Rs. 94,390.75. Subsequently the assessment was reopened, The Income-tax Officer held that on dissolution of the firm on 30-6-1971 the closing stock should have been taken not at the cost price as show