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TMI Blog2018 (1) TMI 507X X X X Extracts X X X X X X X X Extracts X X X X ..... 0-2017 - SHRI G.S. PANNU (AM) AND SHRI RAM LAL NEGI (JM) For The Revenue : Shri A. Mohan (CIT) For The Assessee : Shri Vimal Punamiya (AR) ORDER PER RAM LAL NEGI, JM This appeal has been filed by the revenue against order dated 25/06/2014 passed by the Ld. Commissioner of Income Tax (Appeals)- 40, Mumbai, for the assessment year 2006-07, whereby the Ld. CIT (A) has allowed the appeal filed by the appellant/assessee against assessment order passed u/s 143 read with section 153A of the Income Tax Act, 1961 (for short the Act ). 2. Brief facts of the case are that the assessee a partner in M/s Nahar Seth Enterprises, M/s Nahar Builders and M/s Shanti Enterprises, having income from salary, business, capita ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is appeal before the Tribunal raising the following effective grounds:- i. Whether on the facts and circumstances of the case and in law, the Ld. CIT (A) failed to appreciate the fact that the revaluation of assets of the firm instead of being kept in Revaluation Reserve had been credited directly to the Partners Capital thereby enriching the personal capital. ii. Whether on the facts and circumstances of the case and in law, the Ld. CIT (A) has failed to appreciate that this amount is nothing but an income in the hands of the partners to be assessed to taxed as income under the head Income from Other Sources read with Sec. 28 of the IT Act. iii. Whether on the facts and circumstances of the case and in law, the Ld. CIT (A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ii) CIT vs. Kunnamkulam Mill Board 257 ITR 544, iii) ITO vs. Paru D Dave 110 ITD 410 Mum. ( Tribunal) , iv) DCIT vs. Manish M Chheda 29 SOT 138 Mum. (Tribunal) and v) Girish Textile Industries vs. ACIT 10 SOT, Mum (Tribunal) 8. The concluding para of the impugned order passed by the Ld. CIT(A) reads as under: 12. In view of the above discussion, as also in view of the case laws discussed hereinabove, I hold that revaluation of assets by the partnership firm and crediting of his shares in such increased value to the capital account of the partners, is not a taxable event. Further relevant details regarding revaluation of assets (property) has been furnished. This property was initially valued at ₹ 7,15,957/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssets and consequent reduction in the share ratio of present partners do not entail any relinquishment of their rights in the partnership property. On introduction of new partners, there is realignment of share ratio inter se between the partners only to the extent of sharing the profits or losses, if any, of the partnership business. When any new partner is introduced into an existing partnership firm, the profit sharing ratios undergo a change, which does not amount to transfer as defined under s. 2(47) of the Act, as there is no change in the ownership of assets by the partnership firm. As during the subsistence of the partnership firm, the partners have no defined share in the assets of the partnership and thus on realignment of profit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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