Capital gains on partnership dissolution receipts excluded where partners only receive their share of distributed assets.

Amounts received by partners on dissolution of a firm were treated as their shares in the assets distributed on dissolution, not as consideration for a transfer of partnership interest. That distribution fell within the dissolution exception and did not constitute a taxable transfer for capital gains purposes. The wider definition of "transfer" under the 1961 Act did not change the result on these facts. The receipts on dissolution were therefore not assessable as capital gains, and the additions were deleted.

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Issues: Whether the amounts received by the partners on dissolution of the firm were chargeable to capital gains tax.

Analysis: The amounts received represented the partners' shares in the assets distributed on dissolution of the firm. Such a distribution falls within the exception for transfers resulting in distribution of capital assets on dissolution, and does not amount to a taxable transfer for capital gains purposes. The principle that a partner receiving his share on dissolution does not receive consideration for a transfer of his interest in the partnership assets was applied. The wider definition of "transfer" under the 1961 Act did not alter that result on the facts of distribution on dissolution.

Conclusion: The receipts on dissolution were not assessable as capital gains and the additions were deleted.

Ratio Decidendi: A partner's receipt of his share in the assets or value of a dissolved firm, being distribution on dissolution and not consideration for a transfer of his interest, is outside capital gains taxation.

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