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TMI Blog2006 (11) TMI 643X X X X Extracts X X X X X X X X Extracts X X X X ..... ate? (2) Whether on the fact and the circumstances of the case the tribunal was right in holding that although the firm M/s Maganahalli Steel Corporation did not get dissolved on 30.09.1983, it was not liable to be taxed on capital gains on the sale of immovable property belonging to it? 3. The facts of the cases are on paragraphs 4 to 7 of the reference, reading as under: 4. M/s Maganahalli Steel Corporation (hereinafter called as MSC ) was formed as a partnership firm on 1.4.1976 for the purpose of carrying on business of dealing in iron and steel items. On 26.08.1977 a property at BC Road Davangere hearing D No. 120/1 was purchased out of the firm s funds in the name of the then partners Shri M.H. Nijananda for a consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hree erstwhile partners of MSC viz., Shri M.V. Mahendraswamy, M.V. Narendranatha,and M.V Rajendranath formed another partnership firm under the name and style Maganahalli Associates (hereinafter called as MA ) by a partnership deed executed on 2.10.1983. A copy of the said partnership deed was also placed on the records of the AO. According to the above partnership deed, the above mentioned property belonging jointly to the three partners was made the property of the firm and the capital of the firm and the capital of the partners was constituted mostly by way of impressing the said property with the partnership character. This partnership firm also carried on business in the same line viz., iron and steel items with the additional prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ormation of a new firm viz., MA. Accordingly, the AO assessed the capital gains arising on the sale of the above mentioned property as short term capital gains in the hands of the assessee-firm MSC. Some business income disclosed by MA during this year was also assessed in the hand of MSC. In this connection, certain other facts are also required to be mentioned. Return of income of MSC for the assessment year 1985-86 for the truncated period up to the date of dissolution viz.,30.09.1983 uis stated to have been filed on 29.06.1985. A copy of the acknowledgment issued by the IT office in this connection was placed on the record of the tribunal. There is some dispute as to whether this return of income was actually filed in due course or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... MA applied for a clearance certificate under section 230 A, which was duly granted by the ITO. 6. The main dispute between the Department and the assessee which was required to be resolved by the Tribunal was whether MSC had actually been dissolved with effect from 30.9.1983 and the new firm had come into existence from 1.10.1983. The AO had collected evidences from various authorities and discussed them in detail in the assessment order to show that by circumstantial evidences it could be considered that the dissolution of the earlier firm and formation of the new firm were not genuine. At the first appellate stage also, the CIT (Appeals) made detailed discussion of the said arguments. The departmental wanted to establish its point a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 983 was required to be accepted. 7. After accepting the fact that MSC had not been dissolved and MA had not actually came into existence, the Tribunal however, finally found that the property in question had not actually been transferred by MSC but by the three male partners of the said firm viz. Shri M.V. Mahendraswamy, M.V. Narendranatha,and M.V Rajendranath acting as partner of new firm MA. The tribunal found that the other partner of MSC viz. Smt M.R Jayashree was in no way, associated with the sale of the property. The Tribunal also found that not only did the purchaser accept these three male persons to be the owner of the property as vendor thereof but even the sale consideration also was deposited in the bank account of MA cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e law available to either porties. We see from the order of the tribunal has given findings without proper appreciation of the material given by either parties and in the light of the material available on record. 8. On a reading of the order of the tribunal, we are satisfied that the matter requires relook by the authorities. Even questions of law would sho that they require several findings on facts for the purpose of answer to question of law by tribunal. Taking into consideration all these aspects of the matter, we are of the view that the matter requires reconsideration. 9.Sri A.Shankar, learned Counsel for the assessee would say that the matter may be remained to the assessing officer so that the parties will be able to place al ..... X X X X Extracts X X X X X X X X Extracts X X X X
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