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TMI Blog2014 (8) TMI 203X X X X Extracts X X X X X X X X Extracts X X X X ..... ferred to the retiring partners, there is no transfer of the capital asset – Tribunal rightly was of the view that if there is no transfer of capital asset, Section 45(4) is not attracted - the partnership firm did not cease to hold the property - its right to the property is not extinguished - the retiring partners did not acquire any right in the property as no property was transferred in their favour – thus, the order of the Tribunal is upheld – Decided against Revenue. - ITA No.594 of 2013 - - - Dated:- 23-6-2014 - N Kumar and B Manohar, JJ. For the Appellants : Sri E R Indrakumar, Sr. Adv. and Sri E I Sanmathi, Adv. For the Respondents : Sri A Shankar and Sri M Lava, Adv JUDGEMENT :- PER : N Kumar This appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held that in the remand report it is mentioned that the assessing authority and Additional CIT has verified the books of accounts and documents produced by the assessee and found that a sum of ₹ 40 Lakhs was entered into the current accounts of Sri.Mahesh G. Shetty on 31.3.2008 and the sources are loans taken from three different parties. When the said loans were taken by way of cheques and were properly accounted, the addition was unjustified and therefore, it was ordered to be deleted. Insofar as goodwill is concerned, the remand report showed that there is no transfer involved within the terms of Section 45 and Section 2(47) of the Income Tax Act. It is the case of revaluation of assests and the goodwill was carried in the balance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it of ₹ 40,00,000/- is reflected in the accounts and properly explained and no grievance can be had on that account. Insofar as the transfer of goodwill which resulted in capital gains is concerned, he submitted once the goodwill is valued and it is proportionately distributed to four partners, when two partners paid the consideration while the other two partners walked out of the partnership firm after taking the consideration for the goodwill which was credited to their account, it constitutes a transfer. He relied on the judgment of the Bombay High Court wherein while interpreting Section 45(4) of the Act it has explained the meaning of the word otherwise . Therefore, he submits that it falls under the category of otherwise and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... distribution of capital assets on the dissolution of a firm or other association of persons or body of individuals or otherwise. If in the course of such distribution of capital asset there is a transfer of a capital asset by the firm in favour of a person and it results in profits or gains to the firm, then the said profits or gains shall be chargeable to tax as income of the firm and again for computing such income, Section 48 is attracted. In other words, in the process of a dissolution of a firm, if a capital assest is transferred to a partner which results in profits or gains, then that income is chargeable at the hands of the firm under this provision. In order to attract sub-section (4) of section 45, the condition precedent is, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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