9911796707
TMI Blog1997 (11) TMI 33X X X X Extracts X X X X X X X X Extracts X X X X ..... we must state that the reference to section 41(2) of the Income-tax Act, 1961, in the question of law referred to us is not accurate. There was no consideration of the provisions of the applicability of section 41(2) of the Income-tax Act and there could not be applicability of the said provision to the facts of the case. Therefore, the question of law referred to us is reframed as under : "Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that there can be no assessment of any excess under the provisions of 'capital gains' under the Income-tax Act, 1961 ?" The assessee is an individual and in the accounting year relevant to the assessment year 1977-78, the assessee entered in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. The Revenue carried the matter in appeal before the Income-tax Appellate Tribunal and it was contended on behalf of the Revenue that the Commissioner of Income-tax (Appeals) failed to appreciate that what the Revenue sought to tax was the capital gains arising from the assessee's original contribution of immovable property as his share of capital, and not the capital gains arising to the assessee on dissolution of the partnership deed. It was contended on behalf of the Revenue that there was a transfer of the capital assets by the assessee to the firm and the immovable properties were transferred to the firm when the partnership was formed. The Appellate Tribunal, however, placing reliance on the decision of this court in the case of D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he firm. We have carefully considered the rival submissions of learned counsel appearing for the parties. The Tribunal has decided the only question as to whether there was a transfer of capital asset when the assessee made over the buildings and land to the firm as his contribution and in that view of the matter the Tribunal has not decided any other point. The view of the Tribunal that there was no transfer is based on the decision of this court in D. Kanniah Pillai's case [1976] 104 ITR 520 and the Tribunal held that there was no transfer of the capital asset by the assessee when he contributed the assets to the firm at the time of formation of the firm. This view of the Appellate Tribunal is not legally sustainable in view of the subs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the absence of any finding by the Appellate Tribunal, it is not possible for us to answer that part of the question whether the capital gains liability would be attracted when the amounts are credited both in the capital account and current account of the accounts of the firm, in favour of the partner who brought in his personal assets to the partnership firm as the property. Since the Tribunal has not gone into the question whether it is possible to reckon the partner's interest and whether any liability to capital gains would arise, when certain amounts were credited in the current account of the partners and the nature of the current account we direct the Appellate Tribunal to decide the question in the light of the observations made by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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