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Issues:
1. Assessment of capital gains in the hands of the assessee-firm or a partner. 2. Validity of the Tribunal's decision confirming the deletion of capital gains from the assessment of the firm. Analysis: 1. The case involved a partnership firm consisting of partners, one of whom had retired earlier. The firm had transferred property to a third party, and the question arose whether the capital gains should be assessed in the hands of the firm or the retired partner. The firm argued that the retired partner was in possession of the property and should be liable for capital gains. However, the court found that there was no valid transfer of the property to the retired partner. The court emphasized that for a transfer to be valid, it must be executed and registered as per legal requirements. The court cited precedents to support the requirement of a formal conveyance deed for property transfer. The court concluded that the firm, not the retired partner, was liable for capital gains tax on the property transfer. 2. The Tribunal had confirmed the deletion of capital gains from the firm's assessment, a decision challenged by the Revenue. The firm contended that the retired partner being in possession of the property should be liable for capital gains. However, the court rejected this argument, emphasizing the lack of evidence for a valid transfer to the retired partner. The court highlighted the legal requirement of a formal conveyance deed for property transfer and cited relevant precedents. The court noted that the firm had executed sale deeds in favor of a third party, establishing the firm's liability for capital gains tax. Consequently, the court set aside the Tribunal's decision and upheld the assessing authority's order, holding the firm responsible for capital gains tax. In conclusion, the court ruled against the assessee, finding that the firm, not the retired partner, was liable for capital gains tax on the property transfer. The court emphasized the legal requirement of a formal conveyance deed for property transfer and cited precedents to support its decision. The court set aside the Tribunal's decision and upheld the assessing authority's order, holding the firm accountable for capital gains tax.
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