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TMI Blog1986 (12) TMI 76X X X X Extracts X X X X X X X X Extracts X X X X ..... hip with K.R.I.C. Co. (1978) having 40 per cent share therein. As his capital contribution, the assessee contributed, among others 11,402 shares aforesaid on1st January, 1978amounting to Rs. 4,17,313. The value of these shares was calculated at the rate of Rs. 36.60 per shares. The ITO required the assessee to explain why capital gains on the said transaction be not charged. The reply of the assessee was that the shares in question were introduced in the firm K.R.I.C. Co. (1978) as his capital contribution and that the surplus on the valuation of the shares at the rate of Rs. 36.60 per share as against the normal value of Rs. 10 per share did not involve any capital gains since the conversion of a personal asset of a partner into partnershi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e at page 523 and submitted that the transfer by the assessee of the shares in question to the partnership firm did not represent a genuine intention to contribute to the share capital of the firm for the purposes of carrying on the partnership business and that it was merely a device or ruse for converting the asset into money which substantially remained available for his benefit with liability to Income-tax on capital gain and that, therefore, the Income-tax authorities were justified in going behind the transaction and in examining whether the transaction of creating the partnership was a genuine or a sham transaction and that even where the partnership was genuine, the transaction of transferring the shares to the partnership firm repr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... offered on receipt basis in the next year and had been taxed accordingly. The assessee had explained that the original pay order dated 9th Oct., 1978 had been lost and, therefore, he had obtained a duplicate pay order and had actually realised the amount on20th February, 1979i.e. in the next previous year. However, the ITO taxed the amount in the assessment year in question on the ground that the interest taken was credited in the assessee's CDS. Account Book on9th Oct., 1978. He held that interest had accrued to the assessee under section 8 of the Compulsory Deposit Scheme (ITP) Act, 1974. 7. The learned Commissioner (Appeals) confirmed the order of the ITO. 8. We have considered the rival submissions of both the sides on this point. W ..... X X X X Extracts X X X X X X X X Extracts X X X X
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