TaxTMI 
TaxTMI 
2017 (11) TMI 913
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....y reviewing AOs order held the arrangement to be a colorable and therefore, direct to explore the possibility of taxing the revaluation profits. He has failed to appreciate AO has adopted a view to protect the interest of the revenue in case of the firm by reducing the value of closing stock holding the same to taxable in the hands of the partners. Thus ld.CIT in the guise of 263 powers has reviewed a justifiable view taken by AO which is without jurisdiction and beyond the scope of reversionary powers. 2.12 Reliance is placed on following case laws:- Sudhakar M. Shetty Vs. ACIT 130 ITD 197 (Mum) Supreme Court in case of CIT Vs MaxIndia Ltd. 295 ITR 292. CIT Vs. Chambal Fertilizers and Chemicals Ltd. (2014) 360 ITR 225 (Raj.) CIT Vs. New Delhi Television Ltd. (2013) 94 DTR 21 (Del.)(HC) CIT Vs. AmitCorpn. (2013) 213 Taxman 19 (Guj.)(HC)(Mag.) CIT Vs. Leisure Wear Exports Ltd. (2011) 341 ITR 166 (Delhi) (HC) PradeepBandhu Vs. CIT (2013) 81 DTR 289 (Jd) (Trib.) Manish Kumar Vs. CIT 134 ITD 27/ 17 ITR (Trib.) 324(Indore)(Trib.) It is contended that there being neither error in the order of ld. AO nor any prejudice to the interest of revenue, 263 order may be....
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....n record. The assessment in question was consequent to a search; assesses non cooperation has been adversely viewed by AO and at the end of the day search assessment was framed without co operation of the assessee. Assessment order refers to various frequent reconstitution of the firm and transfer of land rights therein; instances of revaluation of land; claim of their exemption from the taxation are not addressed in the ex parte search assessment order. The issues raised by ld. CIT for non inquiry are found to validly raised and ought to have been inquired by AO more particularly when assessee was non cooperative. For this purpose necessary field inquiries were necessary besides cross verification of record of other search entities. This exercise was required from the AO to have been conducted as a sensible quasi judicial officer. Thus all the deficiencies referred to by ld CIT make the impugned assessment order erroneous as well as prejudicial to the interest of revenue. The reliance on the judgments of Smt. Taradevi Agrawal and Smt. Renu Gupta is well placed by ld CIT. We uphold the order passed u/s 263. 5. Counsel for the appellant has taken us to the provision of Sec.48 of t....
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.... :] Provided also that no deduction shall be allowed in computing the income chargeable under the head "Capital gains" in respect of any sum paid on account of securities transaction tax under Chapter VII of the Finance (No. 2) Act, 2004.] Explanation For the purposes of this section,- (I) "foreign currency"and "Indian currency" shall have the meanings respectively assigned to them in section 2 of the Foreign Exchange Management Act, 1999 (42 of 1999)]; (ii) the conversion of Indian currency into foreign currency and the reconversion of foreign currency into Indian currency shall be at the rate of exchange prescribed in this behalf; (iii)"indexed cost of acquisition" means an amount which bears to the cost of acquisition the same proportion as Cost Inflation Index for the year in which the asset is transferred bears to the Cost Inflation Index for the first year in which the asset was held by the assessee or for the year beginning on the 1st day of April, 1981, whichever is later; (iv)"indexed cost of any improvement" means an amount which bears to the cost of improvement the same proportion as Cost Inflation Index for the year in which the asset is transferred....
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....n favour of the retiring partners, no profit or gain arose in the hands of the partnership firm. Therefore, the question of the firm being assessed under Section 45(4) and charging them tax for the profits or gains which did not accrue to them would not arise. 25. It was contended on behalf of the revenue that five incoming partners brought money into the firm. Three erstwhile partners who retired from the partners on 01.04.1994 took money and left the property to the incoming partners. It is a device adopted by these partners in order to evade payment of profits or gains. As rightly held by this Court in Gurunath's case (supra) it is taxable. This argument proceeds on the premise that the immovable property belongs to the erstwhile partners and that after the retirement the erstwhile partners have taken cash and given the property to the incoming partners. The property belongs to the partnership firm. It did not belong to the partners. The partners only had a share in the partnership asset. When the five partners came into the partnership and brought cash by way of capital contribution to the extent of their contribution, they were entitled to the proportionate share in the....
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....t on a notional basis but on a real basis, that is every asset of the partnership should be converted into money and the account of each partner settled on that basis.... The assets have to be valued, of course, on the basis of the market value on the date of the dissolution... 36. This applies equally well to assets which constitute stock-in-trade. There can be no manner of doubt that, in taking accounts for purposes of dissolution, the firm and the partners, being commercial man, would value the assets only on a real basis and not at cost or at their other value appearing in the books. A short passage from Pickles on Accountancy (Third Edn), p. 650 will make this clear: In the event of the accounts being drawn up to the date of death or retirement, no departure from the normal procedure arises, but it will be necessary to see that every revaluation required by the terms of the partnership agreement is made, it has been laid down judicially that, in the absence of contrary agreement, all assets and liabilities must be taken at a "fair value," not merely a "book value" basis, thus involving recording entries for both appreciation and depreciation of assets and liabilities. Th....