1955 (9) TMI 74

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..... and they sold them on the 10th of March, 1947. The partnership assets realised a gain of ₹ 30,447, and the Income-tax department contended that this sale had resulted in a capital gain within the meaning of section 12B and that the firm was liable to be assessed to tax on this capital gain. The contention of the assessee was that its case fell within the third proviso to section 12B. This .....

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..... viso has no application to the facts of this case. The position is identical with the position that arose in Commissioner of Income-tax, Bombay City v. James Anderson [1954] 26 ITR 699 which we had to consider. There it was a case of an executor selling the assets of the testator and then distributing the sale proceeds to the legatees, and we pointed out in that case that the proviso does not a .....

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..... tion of Mr. Kotwal is that under the partnership law a sale of partnership assets is part of the distribution of the assets, and therefore the case falls under the third proviso, and he has relied for this purpose on section 48 of the Partnership Act. Sub-section (b) of that section provides: The assets of the firm, including any sums contributed by the partners to make up deficiencies of cap .....

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..... tnership there may be no debts and the partners may agree instead of selling partnership assets to divide them between themselves in specie. Therefore it would not be correct to say that the partnership law requires that in the case of every dissolution, partnership assets must be sold as a part of the machinery for distributing the partnership assets on dissolution. The next contention urged .....

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..... be a result of an order of the Court, it is not the order of the Court that vests the title in the purchaser. In order to vest the title in the purchaser the receiver has to execute a conveyance in favour of the purchaser and it would be that conveyance which would ultimately vest the title in the purchaser. Therefore the sale effected by the receivers was a sale as contemplated by the Transfer of .....

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