9911796707
TMI Blog1981 (5) TMI 48X X X X Extracts X X X X X X X X Extracts X X X X ..... computing the capital gains, the assessee had taken the cost of the asset at Rs. 9,40,000. The firm consisted of two partners, viz., Shri T.T. Narasimhan and Shri T.T. Jagannathan. It came into existence during the asst. yr. 1973-74, after the dissolution of a firm by the same name but with two other partners. The ITO substituted the written down value of the building and land. He also applied the provisions of s. 49(iii)(b) r/w s. 50 of the IT Act. The written down value amounted to Rs. 5,86,941. The additions made amounting to Rs. 40,000 was added. The next adjustment made by the ITO was in relation to the sale price. Applying s. 52 (2) with the previous approval of the IAC he adopted a fair market value of Rs. 13, 48,500. Finally, the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... changes reconstitution. There is a deed dt. 9th June, 1961. A copy of this deed was placed before the Tribunal. Thereafter, there was a Partnership Deed dt. 1st Jan., 1968. This partnership was dissolved, and a copy of the dissolution deed dt. 13th April, 1972 was placed before the Tribunal. The present constitution is evidenced by a Partnership Deed dt. 2nd June, 1972. At the time of the Dissolution of the Old Partnership, the value of its assets was placed at Rs. 9,00,000 and this is the cost to the new firm. It was also submitted with reference to the accounts for the years earlier to 1972 that no depreciation was allowed on this item. Attention was invited to the assessment orders for 1973-74 and 1974-75. What should be taken as the cos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ec. 49 clearly applies. This is a case of succession. In this connection reference was invited to the decision in the case of Malabar Fisheries Co. vs. CIT (1979) 12 CTR (SC) 415 : (1979) 120 ITR 49 (SC) at 57. The property is really the property of the partners. If so these two partners were there in the previous firm and they succeeded to that property with the result that what was sold is a long term capital asset. and that the written down value of the earlier firm has been correctly taken. 6. We have carefully considered the matter. A firm styled Precision Engineers came into existence in accordance with a deed dt. 25th Jan., 1957. As some of the original partners retired, a new deed was entered into on 9th June, 1961. The particular ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore, clear that this firm did not get the capital asset by succession, inheritance or devolution from the previous owner or on any distribution of assets on the dissolution of a firm in accordance with s. 49(1). It is the asset of a firm which was distributed of the two partners, S/Shri T.T. Narasimhan and Shri T.T. Jagannathan, and it is they who brought it into the new firm. In the circumstances, s. 49 can have no application. It is no doubt true that the properties of the firm are the properties of the partners, but for assessment, they are two Separate units. This firm has not succeeded to the property or that this firm did not get the property on the dissolution of any earlier firm. Secondly, s. 50 is also not applicable. From the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the assessee firm, one has to look into the substance of the transaction. This firm came into existence on 2nd June, 1972. Prior to that it was not the property of this firm. We, therefore, agree with the ld. Counsel for the assessee that it has to be processed as a short term capital gains. In the result, we would allow this contention of the assessee and hold that capital gains has to be computed as short term capital gains. 7. The next two grounds relate to the charging of interest u/s 139(8). Even though this ground was raised, it was not considered by the CIT (Appeals). However, it was claimed that in view of the decision in the case of CIT vs. Executors of the Estate of late H.H. Rajakuverba Dowager Maharani Saheb of Gondal 197 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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