Contribution of assets to a partnership firm is not a transfer under section 2(47), so capital gains do not arise.

Contribution of joint stock as capital to a partnership firm was held not to amount to a transfer within section 2(47) of the Income-tax Act, following the binding reasoning in the connected Division Bench matter. As no transfer was found, no computable profits and gains arose under the head of capital gains. The operative principle is that mere introduction of an asset as capital in a firm does not, by itself, attract capital gains liability under section 2(47).

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Issues: Whether the assessee's contribution of joint stock as capital to a firm amounted to a transfer within the meaning of section 2(47) of the Income-tax Act, 1961 so as to attract capital gains.

Analysis: The issue was concluded by following the binding reasoning of the Division Bench decision in the connected matter, which had already held that such contribution did not constitute a transfer for the purposes of section 2(47). On that basis, no computable profits and gains arose under the head "Capital gains".

Conclusion: The question was answered in the negative and against the assessee. The contribution of joint stock as capital to the firm did not amount to a transfer under section 2(47), and the Revenue succeeded.

Ratio Decidendi: Contribution of an asset as capital to a partnership firm does not, by itself, amount to a transfer within section 2(47) so as to give rise to capital gains.

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