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2018 (6) TMI 470 - ITAT MUMBAIRevision u/s 263 - Held that:- As perused the order passed by the CIT under Sec. 263, dated 25.11.2009 (Page 23-24 of APB) and are not persuaded to subscribe to the contention of the assessee that the A.O while passing the order in pursuance to the directions of the CIT had exceeded his jurisdiction and adjudicated on certain issues which never formed the subject matter of the order passed by the CIT. We are of the considered view that as the order passed by the A.O under Sec. 143(3) r.w.s. 263, dated 16.12.2010 is well in conformity with the directions given by the CIT in his order passed under Sec. 263, therefore, the aforesaid contention so raised by the assessee cannot be accepted Distribution of capital assets on dissolution of a firm - eligible transfer u/s 2(47) - Capital gain - period of holding - LTCG or STCG - Held that:- With the striking off of Sec. 47(ii) and making available of Sec. 45(4) on the statute, vide the Finance Act, 1987, w.e.f A.Y 1988-89, the working of Sec. 2(42A) r.w Sec. 49(1)(iii)(b) subsequent to A.Y 1987-88 stands jeopardised. We find that our aforesaid view stands fortified by the judgment of the Hon’ble High Court of Bombay in the case of CIT Vs. A.N Naik Associates (2003 (7) TMI 46 - BOMBAY HIGH COURT). The High Court in its aforesaid judgment had observed that the result of the amendment carried out by the Finance Act, 1987 by omitting Sec. 47(ii), was that distribution of capital assets on dissolution of a firm would be regarded as a “transfer”. As the case of the assessee before us pertains to A.Y 2005-06 and the firm, viz. M/s Printpals stood dissolved on 16.05.2003 on the death of the other partners, thus the judgment of the High Court of Madras in the case of CIT Vs. M.K Chandrakanth & Ors (2002 (7) TMI 57 - MADRAS HIGH COURT ) relied upon by the ld. A.R would not be of any assistance in the present case Entitlement towards exemption under Sec. 54EC - Held that:- Continuing of the business by the assessee after the dissolution can safely or rather inescapably be taken as the distribution of the assets to him. Thus, in the backdrop of the aforesaid state of affairs, we are persuaded to subscribe to the claim of assessee that the ‘transfer’ of the assets in terms of Sec. 45(4) had occasioned in the hands of the dissolved firm, viz M/s Printpals on 16.05.2003. As the ‘Fair Market Value’ of the assets is to be deemed to be the full value of consideration received or accrued to the firm, hence the ‘Cost of acquisition’ of the asset under consideration cannot be taken at a different figure, but as per our considered view, has to be adopted as the ‘Fair Market Value’ of the same on the date of dissolution and distribution of the assets, i.e 16.05.2003. Direct the A.O to recompute the ‘Capital gain’ in the hands of the assessee by adopting the ‘Fair Market Value’ of the property under consideration, viz. Industrial unit on 16.05.2003, as the ‘Cost of acquisition’ in the hands of the assessee. We thus, are of the considered view that though the contentions advanced by the assessee as regards its entitlement towards exemption under Sec. 54EC has to fail, but those advanced in context of quantification of the capital gains in his hands merits acceptance, in terms of our aforesaid observations - Decided partly in favour of assessee.
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