AI Drafter 
TaxTMI 
TaxTMI 
2004 (2) TMI 28
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....to the assessee from the partnership and it became a part of the stock-in-trade of the assessee? 2. Whether, on the facts and in the circumstances of the case, the assessee was entitled to set off the liabilities of partnership in the computation of the capital gain and if so, to what extent?" So far as question No. 3 is concerned, it does not arise and, therefore, we are not required to examine it and is returned unanswered. The facts relevant to decide the aforesaid questions are as under: The assessee-Delhi Safe Deposits Company Ltd. entered into an agreement of partnership with John Elliot on February 15,1964. A copy of the agreement is produced at annexure A. The said firm was known as M/s. Bombay Tool and Dye, having its o....
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....fferent years and a question with regard to the capital gain arose and the Assessing Officer after examining the matter in greater detail arrived at a conclusion that the total cost to the assessee came to Rs. 6,29,801 while the total sale proceeds received were Rs. 8,61,233 which resulted in capital gain of Rs. 2,32,432. The Assessing Officer divided the capital gain in three different assessment years in which the machinery came to be disposed of. The said bifurcation is as under: Rs. 1968-69 1,25,816 1969-70 354 197....
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....e of interest, the same should be treated as the stock-in-trade of the assessee. We have to examine the nature of the decree drawn by the court at the instance of the assessee. The nature of the decree has much bearing on the subject-matter. The Tribunal after examining the contents of the decree and the ex parte order as well as the contents of the plaint arrived at a conclusion that it was a clear case of dissolution of partnership by a court and it cannot be said that it was a suit filed by a creditor against a debtor. A question was raised that a partner who has advanced money to the partnership has a right to recover the amount which he has given by way of loan and on this basis it was contended that the assessee who has given a loa....
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....f accounts between partners. -In settling the accounts of a firm after dissolution, the following rules shall, subject to agreement by the partners, be observed: (a) Losses, including deficiencies of capital, shall be paid first out of profits, next out of capital, and, lastly, if necessary, by the partners individually in the proportions in which they were entitled to share profits; (b) The assets of the firm, including any sums contributed by the partners to make up deficiencies of capital, shall be applied in the following manner and order: (i) in paying the debts of the firm to third parties; (ii) in paying to each partner rateably what is due to him from the firm for advances as distinguished from capital; (iii) in payin....
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....sition of the capital asset and the cost of any improvement thereto." Only expenditure incurred in connection with the said transfer of the capital assets or cost of acquisition of the capital or cost of any improvement thereto can be deducted from the value of the plant or machinery so as to come to a conclusion as to what is the capital gain. The Assessing Officer has followed the said procedure. In the instant case, it would be relevant to quote section 49(1)(iii)(b): "49. (1) Where the capital asset became the property of the assessee- (iii) (b) on any distribution of assets on the dissolution of a firm, body of individuals or other association of persons, or- the cost of acquisition of the asset shall be deemed to be the co....