9911796707
TMI Blog1977 (6) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee came in his place. The firm owned a house property at 61, Mcleod Street, Calcutta. This house property was sold by the firm for Rs. 3,25,000. The cost of the building was determined at Rs. 2,23,212. The sum of Rs. 1,01,788, which is the difference between the selling price of Rs. 3,25,000 and the cost of Rs. 2,23,212, was determined to be long-term capital gain of the firm. After making the deductions as per provisions of section 80T of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), the amount of capital gain was determined by the Income-tax Officer assessing the firm at Rs. 53,233. This amount was allocated amongst the assessee and the two other partners in equal shares. The amount allocated to the assessee was Rs. 17,744. In the return of income filed by the assessee he had shown his share of capital gains from the firm at Rs. 26,067. Against this amount he claimed deduction of Rs. 25,863. The assessee has claimed this deduction of Rs. 25,863 in the following manner: The property at 61, Mcleod Street, Calcutta, was constructed by the firm on a leasehold land. The lease was taken from one Tapendranath Mitra by Smt. Anandi Devi Agarwalla, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an Saraf assigned his one-third share, right, title and interest in the building at 61, Mcleod Street, Calcutta to the assessee. That the assessee paid a sum of Rs. 10,000 to Tapendranath Mitra, the lessor, for his agreeing to the said assignment and that a sum of Rs. 863 represented the expenses incurred in connection with the said transfer. Before the Appellate Tribunal the learned counsel for the assessee did not press for the sum of Rs. 10,000 stated to have been paid to Tapendranath Mitra, inasmuch as there was no evidence to that effect. Consequently, before the Appellate Tribunal only the other two sums, namely, the sum of Rs. 15,000 and the sum of Rs. 863, were pressed for and the Tribunal considered the claim of the assessee relating to the amount of Rs. 15,863. The Tribunal held that this sum of Rs. 15,863 was spent for becoming a partner in the firm, M/s. Bagaria Building Corporation, Calcutta, and the same could not be allowed as a deduction for computing the amount of the assessee's share in the capital gains earned by the firm. The Tribunal, therefore, confirmed the order of the Appellate Assistant Commissioner and dismissed the appeal. On the above facts, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e where the long-term capital gains relate to buildings or lands, or any rights in buildings or lands, as well as to other assets, the sum referred to in sub-clause (ii) of clause (b) shall be taken to be-- (A) where the amount of the long-term capital gains relating to the capital assets mentioned in sub-clause (i) is less than five thousand rupees, sixty-five per cent. of the amount by which the long-term capital gains relating to any other capital assets exceed the difference between five thousand rupees and the amount of the long-term capital gains relating to the capital assets mentioned in sub-clause (i); and (B) where the amount of the long-term capital gains relating to the capital assets mentioned in sub-clause (i) is equal to or more than five thousand rupees, sixty-five per cent. of the long-term capital gains relating to any other capital assets." It is found that while arriving at the capital gain of the firm, the income-tax authorities took into consideration the provisions of section 48 and section 80T of the Act and assessed the capital gain of the firm at Rs. 53,233 which amount was equally allocated amongst the three partners including the assessee, each ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5,000 paid to the outgoing partner, Shewbhagawan Saraf, by the assessee may be considered as the cost of acquisition of the capial asset so far as the present assessee is concerned. It has been found that the sum of Rs. 15,000 has been paid by the assessee to the outgoing partner, Shewbhagawan Saraf, as a consideration for the deed of assignment which is found in the paper book. The Tribunal has observed that this sum of Rs. 15,000 was paid by the assessee for becoming a partner in the firm, M/s. Bagaria Building Corporation, Calcutta, and, therefore, the same amount could not be allowed as deduction for computing the amount of the assessee's share in the capital gains assessed for the firm. But we have to consider this question at two stages. The first stage is the computation of the capital gain of the firm and the second stage is the computation of the capital gain of the partner. A firm is an assessee and so also a partner is an assessee within the meaning of section 2(7) of the Act. That being the position the cost of the building is certainly deductible while computing the capital gain of the firm. Similarly, when the capital gain is allocated amongst the partners and a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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