TaxTMI 
TaxTMI 
1986 (4) TMI 110
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....irm. In respect of this property an amount of Rs. 4 lacs was credited in the account of the assessee and the value of the land and building was shown as Rs. 4 lacs. 2. The firm was, however, dissolved on18th April, 1979and thus it was in existence only for 17 days. The ITO observed that the sum of Rs. 4 lacs had been paid to the assessee after the dissolution and the cost of the building and land was only Rs. 3,47,177. It was claimed by the assessee that Rs. 4 lacs received by him was only contribution of his capital and there was no capital gain on the transfer of the land and building with the firm. The ITO held that the assessee had earned the capital gain of Rs. 52,923 when a property worth Rs. 3,47,177 was transferred for a consider....
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....d that there is a transfer of the capital asset in this situation and the requirements of s. 45 are satisfied in so far as the firm is concerned. However, in respect of consideration, the Court observed that the credit entry made in the partner's capital account in the books of the partnership firm does not represent the true value of the consideration. It is notional value only and can be taken into consideration on the date of dissolution or on the retirement of a partner. The Court further observed that it was not possible to predicate before hand what will be the position in the terms of monetary value of a partner's share on that date. The Court therefore, observed that such credit entry was not covered as 'consideration' as defined in....
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.... the personal asset into money substantially for the benefit of the assessee while evading tax on a capital gain. The ITO will be entitled to consider all the relevant induce in this regard, whether the partnership is formed between the assessee and his wife and children or substantially limited to them, whether the personal asset is sold by the partnership firm soon after it is transferred by the assessee to it, whether partnership firm has no substantial or real business or the record shows that there was no real need for the partnership firm for such capital contribution from the assessee. All these and other pertinent considerations may be taken into regard when the ITO enters upon a scrutiny of the transaction, for, in the task of dete....
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....s as per the balance-sheet alongwith goodwill of the said partnership business were allotted and assigned jointly with new partners other than the assessee, who had become partners on1st April, 1979. The new partners were to continue the business of the firm. The assessee, his brothers and his two sons relinquished and assigned all their rights and interest in partnership in favour of the new partners, who belong to the family of Dharam Pal & Sons or connected with it. It was also provided that the amounts due to and from the first, second, third and fourth parties, i.e., the assessee, his brother and his two sons were to be paid by the continuing partners within a period of three months form the date of the dissolution deed. 6. From the....