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TMI Blog2010 (1) TMI 1196X X X X Extracts X X X X X X X X Extracts X X X X ..... ibition of movies. However, in the course of time, the building was converted into a hotel and the same was leased to a partnership firm by name M/s Hotel Lucia Drive-in Restaurant. As on 1st April, 1989 the lessor-firm namely, Kanichai Movie Enterprises consisted of only two partners who are husband and wife by name Anto Thomas and Mariamma Anto who are members of the AOP. Similarly, as on 1st April, 1989, the lessee-firm namely, M/s Hotel Lucia Drive-in Restaurant, which was carrying on bar hotel business in the building leased out from the same firm, also had the same partners namely, Sri Anto Thomas and Mariamma Anto, which constituted the AOP, the appellant in IT Appeal No. 91 of 2009. In the course of search conducted on 28th July, 1998 by the IT Department in the premises of another firm by name M/s Puther Drugs and its partners and in the premises of common partner of these two firms namely, Anto Thomas, the Department recovered several documents which prove the transaction of sale of land and building with bar hotel by the firm M/s Hotel Lucia Drive-in Restaurant to M/s Puther Drugs consisting of seven partners namely, Sri Stephen Thomas, Sri Joy Thomas. Sri T.M. Thomas, S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ck assessment in principle in both the assessees. the Tribunal has not gone into the appellant s dispute on quantum assessed. 3. In appeal, the appellants have raised questions challenging the validity of assessment, status in which assessment is made and also the manner and method of determination of capital gain in block assessment. The contention raised by senior counsel appearing for the appellants is that block assessment in the hands of AOP under s. 158BC r/w s. 158BD is untenable because according to him, AOP does not exist at all. Similarly, so far as IT Appeal No. 90 of 2009 is concerned, counsel contended that there is no scope for assessment of the individual assesseeappellant under s. 158BC because s. 45(4) provides for only assessment of capital gains at the hands of the partnership firm, that too, only when there is dissolution of the firm and distribution of the assets. The further contention raised by the counsel is that s. 45(3) has no application because the said section provides for assessment in the hands of the partners joining a firm when the sale consideration to be treated as transfer value is the amount credited in the capital account of the partner jo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the very same two partners, namely, Sri Anto Thomas and Smt. Mariamma Anto. Shortly after execution of this transfer deed of the land and hotel building, the two partners namely, Sri Anto Thomas and Smt. Mariamma Anto, inducted 18 other persons by reconstitution of the partnership on 28th April, 1995. The finding of the Departmental authorities based on seized documents is that ever since execution of this deed, the appellants have retained only a nominal capital in their accounts and they have actually withdrawn from business, though on paper they continued as partners. In other words, the execution of the transfer deed of the property on 24th April, 1995, the reconstitution of the partnership with purchasers on 28th April, 1995 and subsequent retirement by the two partners namely, Sri Anto Thomas and his wife along with few others on 12th April, 1996 is a clear scheme of transfer of land and building and bar hotel with licence as a going concern on the specific consideration of ₹ 83.5 lakhs. So much so, in our view, assessment was rightly made for capital gains as the transaction is a clear transfer of property within the meaning of s. 2(47) of the Act without referen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom partnership firm, necessarily, the appellants are entitled to examine the true nature and character of the transaction. Admittedly the two partners namely, Sri Anto Thomas and his wife Smt. Mariamma Anto, became absolute owners of the property when they became the sole partners in the firm M/s Kanichai Movie Enterprises which happened on 1st April, 1989. We have already found that the transfer of land by one firm consisting of two partners to another firm consisting of the very same partners on 24th April, 1995 was only part and parcel of a scheme for sale of property to strangers, which happened when the partnership firm M/s Hotel Lucia Drive-in Restaurant after purchase of the land inducted 18 partners by partnership deed dt. 28th April, 1995. So much so, for the purpose of determination of long-term capital gains, the date of acquisition of the property by the two sellers namely, Sri Anto Thomas and Smt. Mariamma Anto should be taken as 1st April, 1989. Sec. 158BB provides for assessment of undisclosed income also in the same manner in which tax is computed under the provisions of the Act. Long-term capital gain entitles for deduction of cost of acquisition with indexation t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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