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TaxTMI 
TaxTMI 
TaxTMI 
2019 (4) TMI 220
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....ime of making payment to the retiring partners". 2. Brief facts are as under. (I) Respondent assessee a partnership firm, had filed return of income for the assessment year 2010-2011. The assessee was engaged in manufacturing of tube-light fittings and other lighting accessories for over 13 years. The firm was constituted under Partnership Deed dated 16/11/1996, originally consisting of two partners. On 15/01/2010, constitution of the firm underwent a change under a Deed of Reconstitution of partnership. Three new partners were admitted. On 16/01/2010, another Deed of Retirement cum Reconstitution of the partnership was executed by which the original two partners retired from the firm and the remaining three partners redistributed their s....
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.... The assessee carried the matter in further appeal before the Tribunal. The Tribunal by the impugned Judgment allowed the assessee's appeal. The Tribunal was of the opinion that the conditions required for applying section 45(4) of the Act were not satisfied in the present case. The Tribunal placed reliance on the decision of the Karnataka High Court in the case of Dynamic Enterprises (Supra). The Revenue has filed this appeal against the said Judgment of the Tribunal. 3. The counsel for the appellant submitted that decision of this Court in the case of Commissioner of Income-Tax v. A. N. Naik Associates and Another [2004] 265 ITR 346 (Bom) would be applicable in the present case. The Tribunal has committed an error in proceeding on th....
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....hip business. (II) Section 45 of the Act pertains to computation of the capital gains. Sub Section 4 of Section 45 reads as under: "45 (4) The profits or gains arising from the transfer of a capital asset by way of distribution of capital assets on the dissolution of a firm or other association of persons or body of individuals (not being a company or a cooperative society) or otherwise, shall be chargeable to tax as the income of the firm, association or body, of the previous year in which the said transfer takes place and, for the purposes of section 48, the fair market value of the asset on the date of such transfer shall be deemed to be the full value of the consideration received or accruing as a result of the transfer". 6. A....
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.... partners under section 45(4) of the Act. In the said case of Dynamic Enterprises (Supra), the partnership firm was engaged in the business of buying land and properties and construction of buildings thereon. The firm underwent reconstitution. Before such reconstitution the assets of the firm were revalued as per the report of the registered valuer. Three erstwhile partners retired. Retiring partners received enhanced value of the property upon retirement. In this context, the Court considered the above noted question. The Court held that after retirement of partners, the partnership continued and the business was also carried on by the remaining partners. There was thus no dissolution of the firm and there was no distribution of capital as....
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....stribution of capital asset and in the absence of transfer of capital asset in 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. 26. It was contended on behalf of the revenue that the five incoming partners brought money into the firm. Three erstwhile partners who retired from the partners on April 1, 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 arg....