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TMI Blog2010 (10) TMI 828X X X X Extracts X X X X X X X X Extracts X X X X ..... ITA No. 1305/2006 C/W ITA Nos. 1303/2006, 1301/2006, 1293/2006, 1288/2006, 1286/2006 and 1290/2006 - - - Dated:- 23-10-2010 - V.G. Sabhahit, B. Manohar, JJ. E.R. Indra Kumar and P. Dinesh, Advs. for the Appellant Kulkarni for K.R. Prasad and E.R. Indra Kumar, Advs. for the Respondent JUDGEMENT These appeals u/s 260-A of the Income Tax Act, 1961, (hereinafter called as 'Act') are directed against the order dated 7.4.2006 wherein the Income Tax Appellate Tribunal has dismissed the appeals and cross objections filed by the parties. 2. These appeals have been admitted for consideration of the following substantial question of law as framed in ITA. No.1286/06: (1) Whether the Tribunal was right in applying the decision rendered in ITA No.974/B/98 and in holding that the same is identical to the case on hand, when the assessment in the present case was made in the status of a firm, where as in the aforesaid appeal, assessment was made in the status of A.O.P.? (2) Whether the Appellate Commissioner was right in holding that partnership deed dated 30.6.1982 came to be dissolved on 6.12.1987 by virtue of the order of this Court dated 14.6.1991, which co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e shall give six months notice in writing of his or her intention to retire and on expiration of the period of the said notice the said Partner shall cease to be a Partner and subject to para 14 infra from that date all his or her liabilities and rights as a Partner of the firm shall come to an end." 5. Clause (16) of the partnership deed had made specific provisions for the manner in which the affairs of the firm were to be wound up after its dissolution. It reads as under: "16. If the Partnership is dissolved, the going concern carried on under the name of the Firm MANGALORE GANESH BEEDI WORKS and all the trade marks used in course of the said business by the said firm and under which the business of the Partnership is carried on shall vest in and belong to the Partner who offers and pays or two or more Partners who jointly offer and pay the highest price therefore as a single group at a sale to be then held as among the Partners shall be entitled to bid. the other Partners shall execute and complete in favour of the purchasing Partner or Partners at his/her or their expense all such deed instruments and applications and otherwise aid him/her or them for the registration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lic including the partners by giving publicity in three consecutive issues of two English daily national newspapers which have vide circulation in the country and one Kannada daily newspaper having vide circulation in karnataka the time allowed for making offers being at least 45 days between the last publication and the date fixed for receipt of the offers..... (iv) ** ** ** ** (v) If the sale of the dissolved partnership firm as a going concern in favour of any partner or partners or an outsider is accepted by the Court, such offerer shall, within 60 days from the date of the acceptance of the offer, deposit with the Official Liquidator the price or such part of the price together with interest on the total amount of the price at 15% per annum from 6.12.1987 till the date of deposit, which may become liable to be paid to the partner or partners towards their share of the price in the partnership firm together with interest on such amount:" 7. The above said scheme was assailed by some of the partners before the Hon'ble supreme court in special Leave Petition in SLP 10680/1991 which was ultimately dismissed as withdrawn in 1994. In response to the scheme framed by this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court the business was being done by the erstwhile partners and returns were being filed by Association of Persons (erstwhile partners) and the profit was accounted and depreciation was claimed. However, the firm was dissolved on 6.12.1987 itself and it was not in existence on 17.11.1994 when the assets of the going concern MGBW was sold. However, the Assessing Officer held that the outgoing persons who have received the payment of the value of the assets of the firm are liable to pay capital gain. Since the firm had distributed the amount that was deposited he made an order of protective assessment against the firm also holding that all the partners of the erstwhile firm-MGBW are jointly and severally liable to pay the tax payable on the amount received by them by way of capital gain. The Assessing Officer by his order dated 31.5.1999 ordered that the partners of the going concern would be liable to tax on capital gain u/s 45(1) and in the present case since the quantum has been distributed among the partners Section 45(4) is squarely applicable and accordingly held that since the matter is pending before the ITAT and since there has been confusion regarding the status and also si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment year 1995-96. The said order passed by the ITAT was challenged before this court in ITA No.134/2000, 135/2000, 136/2000, 137/2000, 138/2000, 139/2000, 140/2000, 144/2000, 147/2000 and 146/2000 and therefore these appeals are filed by the revenue. 12. Learned counsel for the respondent-assessee submitted that since the order passed by the ITAT is in consonance with the order passed earlier in the appeals which were pending consideration in ITA Nos.134/2000, 135/2000, 136/20000, 137/2000, 138/2000, 139/2000, 140/2000, 144/2000, 147/2000 and 146/2000,therefore these appeals are liable to be dismissed. 13. We have given careful consideration to the contention of the learned counsel appearing for the parties. 14. It is clear from the material on record that the Assessing Officer held that the income which was received by accepting the highest bid of Rs.92 crores was paid to the erstwhile 9 partners and highest bid was offered by erstwhile 3 partners and it is also clear that the firm M/s.MGBW had dissolved on 6.12.1987 itself and it was not in existence thereafter and returns were being filed by the erstwhile partners in view of the direction issued by this court ..... X X X X Extracts X X X X X X X X Extracts X X X X
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