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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 ..... rief 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, capital gain and other sources, filed his return of income u/s 139(1) of the Act, for the assessment year under consideration declaring the total income of Rs. 32,53,096/- on 31.03.2007. Subsequently, search and survey action was carried out on 02.02.2012 on 'Nahar Group' of cases, its individuals and associate concerns. Based on the seized papers and other incriminating documents found during the course of search, the assessee was confronted and his statement was recorded. Accordingly, notice u/s 153A of the Act was served upon the assessee. In response to the said notic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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) was justified in deleting the addition of Rs. 43,27,322/- made by the Assessing Officer under income from other sources." 5. Before us, the Ld. Departmental representative relying on the assessment order submitted that the Ld. CIT(A) has deleted the addition without appreciating the fact that the firm has credited the revaluation of assets of the firm to the capital accounts of the firm instead of keeping the same in revaluation reserve; that the amount in question is nothing but an income in the hands of the partners including the assessee under the head 'income from other sources' read ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls regarding revaluation of assets (property) has been furnished. This property was initially valued at Rs. 7,15,957/-but as per fresh evaluation its value is worked out at Rs. 2.07,15,957/-. Increased value has been credited to the capital account of the partners, otherwise Balance Sheet of the assessee cannot be balanced. It however does not amount to any benefit or transfer to the partners. In any case this credit cannot be treated as unexplained in the hands of the assessee. Further it does not constitute 'transfer of assets' as defined u/s 2(47) of the Act. Such an arrangement also does not attract the provisions of Sec. 45(4) of the Act, which are attracted only on dissolution of partnership firm. Accordingly, I hold that the amount o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m, the partners have no defined share in the assets of the partnership and thus on realignment of profit sharing ratio, on introduction of new partners, there is no relinquishment of any non-existent share in the partnership assets as the assets remained with the firm. Such an arrangement is not covered by the provisions of s. 45(4) of the Act, which covers the case of dissolution of partnership firm. Accordingly, no capital gains arise on such relinquishment of share ratio in the partnership firm. We confirm the order of CIT(A) and dismiss" 10. The coordinate Bench of the Tribunal has already decided the identical issue in favour of the assessee in ITO vs. Paru D Dave (supra) holding that revaluation of assets of partnership and the cred ..... X X X X Extracts X X X X X X X X Extracts X X X X
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