TaxTMI 
TaxTMI 
TaxTMI 
1978 (8) TMI 70
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....sessee-firm was engaged in the business of manufacture of electrical components. During the assessment years 1967-68 and 1968-69, it had been allowed certain development rebate under s. 33 of the I.T. Act, 1961 (hereinafter referred to as "the Act"). On its dissolution on January 17, 1968, the assets of the firm were distributed amongst the four partners of that firm. The assets in respect of which development rebate had been allowed were, however, allotted to the share of K. N. Narayan, one of the erstwhile partners. On February 1, 1968, K. N. Narayan entered into a new partnership agreement with G. N. Lakshmipathy, who was also an erstwhile partner of the assessee-firm and commenced business of manufacture of electrical components with th....
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....wn?" It has to be mentioned at this stage that the Tribunal, as a matter of fact, found in the course of its order that there was no transfer of machinery and plant in question on the dissolution of the firm which took place on January 17, 1968. But it upheld the order passed by the ITO on the ground that after such dissolution, the erstwhile partner to whom the machinery and plant had been allotted, had formed a new partnership along with another erstwhile partner and made use of the machinery and plant for the purpose of carrying on the business of the new firm. The Tribunal, however, lost sight of the fact that action under s. 155(5) of the Act could be taken only in respect of an order of assessment passed in the case of an assessee wh....
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....tners, no transfer of property takes place. In the said case, certain theatres which belonged to a firm had on its dissolution been distributed amongst its partners. The question was whether there had been a transfer of the said theatres by the firm to the individual partners. The Supreme Court held : "On dissolution of the partnership, each theatre must be deemed to be returned to the original owner, in satisfaction partially or wholly of his claim to a share in the residue of the assets after discharging the debts and other obligations. But thereby the theatres were not in law sold by the partnership to the individual partners in consideration of their respective shares in the residue. The expression 'sale' and 'sold' are not defined in ....