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TMI Blog1984 (12) TMI 87X X X X Extracts X X X X X X X X Extracts X X X X ..... ares by the assessee to the firm, of which he was a partner, as his capital contribution did not amount to a ' transfer ' within the meaning assigned to it under section 2(47) of the Income-tax Act, 1961 (' the Act '), and, therefore, there could be no capital gain arising out of this transfer. The ITO, therefore, worked out the capital gain on the transfer of these shares at the rate of Rs. 61.50 per share and worked out the capital gains at Rs. 1,53,750. Since the shares were held for less than 60 months before the transfer, the capital gain was treated as short-term capital gain and was added to the assessee's other incomes. When the matter went up in appeal, the Commissioner (Appeals) held that since the assessee, who was a partner in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court. Summing up, Shri Kumar vehemently argued before us that on the transfer of the shares by the assessee as a capital contribution to the firm, of which he was a partner, there was a capital gain liable to tax and the Commissioner (Appeals) wrongly held that there was no capital gain on this transfer. 4. On the other hand, the assessee's learned counsel, Shri Inamdar, cited before us three rulings, two of the Hon'ble Madras High Court in the cases of D. Kanniah Pillai v. CIT [1976] 104 ITR 520 and CIT v. H. Rajan and H. Kannan [1984] 149 ITR 545 and another of the Hon'ble Andhra Pradesh High Court in the case of CIT v. A.V. Bhanoji Rao [1983] 142 ITR 706 in support of the contention that the transfer by a partner to the firm, by way ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... necessary for transfer of property by a partner to the partnership firm and when the transfer took place. Both of these cases will, therefore, be of no help on the facts of the present case, where the issue is whether there was an extinguishment of the rights or interest of a partner in a property transferred by him to a firm as his capital contribution. It is also necessary here to point out that the ruling of the Hon'ble Gujarat High Court in the case of Kartikey V. Sarabhai was not only followed by their Lordships in the case of H.H. Maharaja F.P. Gaekwad, the special leave petition against the judgment of the Hon'ble High Court in the case of H.H. Maharaja F.P. Gaekwad was dismissed by the Hon'ble High Court. With very great respect, t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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