TaxTMI 
TaxTMI 
2010 (10) TMI 828
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....tus of A.O.P.? (2) Whether the Appellate Commissioner was right in holding that partnership deed dated 30.6.1982 came to be dissolved on 6.12.1987 by virtue of the order of this Court dated 14.6.1991, which continued up to 17.11.1994 till the assessment year 1995-96, without considering the legal evidence contrary on record? (3) Whether the Appellate Commissioner was right in taking profit of the sale of the firm for the assessment year 1995-96 is not assessable to capital gains tax under section 45(1) or section 45(4) of the Income Tax Act? 3. The material facts of the case giving rise to the above said substantial questions of law are as follows: In 1939, late S. Raghuram Prabhu Started the business of manufacturing beedies. Subsequently, his brogher-in-law, Sri Madhav Shenoy also joined him in the business as a partner and thus M/s. Mangalore Ganesha Beedi Works (for short 'MGBW'), the firm, came into existence with effect from 28.3.1940. Thereafter, the said firm was reconstituted from time to time. The last reconstitution of the firm was evidenced by a partnership deed dt.30.6.1982 and according to the averments made in the deed, the las....
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....ed instruments and applications and otherwise aid him/her or them for the registration his/her name or their names of all the said trade marks and do all such deed, acts and transactions as are incidental or necessary to the said transferee or assignee Partner or Partners." 6. Pursuant to Clause 3 of the Partnership Deed, the Partnership was dissolved by efflux of time on 5.6.1987, but because of the mutual agreement among the partners as provided in clause (3) itself the duration was extended for a further period of six months i.e., upto 5.12.1987 and therefore the firms stood dissolved with effect from 6.12.1987. Thereafter, the affairs of the firm had to be would up after its dissolution under Clause 16 of the Partnership Deed as referred to above. However, because of the difference of opinion among the erstwhile partners the affairs of the firm could not be wound up. Therefore, two of the partners of the firm filed a petition before this court under the provisions of Part X of the Companies Act, 1956, for winding up of the affairs of the firm in terms of Section 583 (4)(a) thereof. This petition was registered as Co P.1/1988. In the said petition by order dated 5.5.11....
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....al Leave Petition in SLP 10680/1991 which was ultimately dismissed as withdrawn in 1994. In response to the scheme framed by this court by order dated 14.6.1991 several partners either individually or in groups effered their bids. The bid offered by an association of persons comprised of three partners namely M. Vishwanath Rao, M Jaganath Shenoy and M Gopinath shenoy (hereinafter referred to as the 'AOP-3') was found to be the highest being of Rs.92 crores and the same was accepted by this court vide its order dated 21.9.1994 and the following order as passed on the said day: "The highest bid amount of Rs. Ninety two crores is accepted and the group of persons offering the said amount are directed to deposit within 60 days from today with the Official Liquidator the entire amount of ninety two crores together with actual profits earned from 6.12.1987 till 31.3.1994 and proportionate profit from 1.4.1994 till the date of deposit in terms of the orders of this Court earlier issued in C.A.No.313/1994." 8. At the instance of the three partners offering highest bid. Clause (1) of the order defendant 21.9.1994 was amended by a subsequent order defendant 19.9.1994. The....
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....rely applicable and accordingly held that since the matter is pending before the ITAT and since there has been confusion regarding the status and also since the department has a right to assess the income in the hands of the correct assessee the protective order was passed against MGBW represented by its erstwhile partners and it was held that all the erstwhile partners are jointly and severally liable for the amount of tax payable u/s 45(4) of the Act. Being aggrieved by the said order passed by the Assessment Officer the erstwhile partners who were imposed tax by admitting the capital gain as taxable on the firm u/s 45 (4) of the Act, preferred appeal before the Commissioner of Income Tax (Appeals)-III, Bangalore and the Appellate Authority reversed the finding of the Assessing Officer and held that the out going partners of MGBW are liable to pay capital gain u/s 45(1). However, the firm M/s. MGBW has been dissolved with effect from 6.12.1987 and the firm was not in existence during the previous assessment year 1994-95 and the relevant assessment year 1995-96 and accordingly cancelled the order of assessment dated 31.5.1999 and accordingly allowed the appeal. Being aggrieved by ....