TaxTMI 
TaxTMI 
TaxTMI 
2002 (9) TMI 46
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....ight in holding that the device encompasses the goodwill amounting to Rs. 2,72,500 also?" The assessee is an individual. He was one of the partners in a firm, styled as "Sakthi Velu Poly Pack", which firm had come into existence under a deed dated October 12, 1970. That firm was dissolved on April 1, 1980, the assessee taking over all the assets and liabilities of the firm and taking over its business as a going concern. The firm which was so dissolved had made profits during the three years preceding the date of dissolution. The goodwill was not taken into account while drawing up the accounts as on April 1, 1980. The assessee ran the business as a proprietary concern for about a year thereafter. On April 21, 1981, he got certain assets ....
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....apital as determined as per clause (3) shall be transferred to the current account of the party of the first part and shall be withdrawn by the party of the first part as and when he likes." The assessee withdrew a sum of rupees seven lakhs from his capital account on May 16, 1981, and a further sum of Rs. 2,15,000 on August 29, 1981. After such withdrawal, the amount left in the capital account of the assessee was only Rs. 2,50,000. It was a portion of the value assigned to the goodwill and which goodwill had not been valued at any time prior to the formation of this firm. The Assessing Officer having taken note of the unusual features in the manner in which this firm was formed, the amount credited to the capital account of the assessee....
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....ddhardhbhai v. CIT [1985] 156 ITR 509, a decision rendered by a Bench of three judges, held that when a person brings his personal assets into a firm, there is a transfer within the terms of section 45 of the Income-tax Act, 1961, as the exclusive interest of the partner is reduced into a share interest. While also holding that that transfer would, however, not be assessable to capital gains tax as it is impossible to conceive of evaluating the consideration acquired by the partner when he brings his personal asset into the partnership firm when neither the date of dissolution or retirement can be envisaged, nor can there be any ascertainment of liabilities and prior charges which may not have even arisen yet, the court made the following o....
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....ion was at no time cancelled, nevertheless the transaction of transferring the personal asset of the assessee, viz., the running business which was his proprietary concern to the partnership firm was in substance and reality a device or a ruse to convert that personal asset into money and was not aimed at contributing to the share capital of the partnership firm. When the firm was constituted on April 22, 1981, the value of the business of the assessee who was prior to the formation of the firm carrying on that business as a proprietary concern, had been revalued by him on his own and that higher valuation was credited to his capital account in the firm. But that amount was not to be his capital contribution. The whole of that amount was av....