1989 (3) TMI 97

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.... J. -Where a partner, as his contribution towards the capital of the firm, makes over to it a capital asset owned by him, does it amount to a transfer of the asset and if so, does the credit given for it in the books of the firm attract capital gains tax if such credit exceeds the price at which it had been acquired by the partner ? Herein lies the matter in issue in this reference. On August 2....

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....of the firm. The Income-tax Officer held this to be a transfer and taxed the profit as capital gains. This order was upheld in appeal by the Commissioner of Income-tax (Appeals) and also later by the Tribunal following in this behalf the judgment of the High Court of Gujarat in CIT v. Kartikey V. Sarabhai [1981] 131 ITR 42. This is what led to the following question referred for the opinion of thi....

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....n 45 of the Income-tax Act, 1961, but the consideration which the partner acquires on making over his personal asset to the partnership firm, as his contribution to its capital, cannot fall within the terms of section 48 and as that provision is fundamental to the computation machinery incorporated in the scheme relating to the determination of charge provided in section 45, such a case must be re....