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2023 (8) TMI 1221 - AT - Income TaxConversion of the Partnership Firms into Companies - Capital gain on revaluation of land made in the hands of the Partners - Difference between the costs of lands and revalued amounts credited to the Appellant's capital account in the partnership firm - HELD THAT:- In the instant case, the shares of the respective shareholders in the respondent-company were defined under the erstwhile Partnership deed. The only change that has taken place on the respondent being transformed into a company was that the shares of the partners were reflected in the form of share certificates. Beyond that, there was no physical distribution of assets in the form of dividing them into parts, or allocation of the same to the respective partners or even distributing the monetary value thereof. The Hon’ble Gujarat High Court in the case of DCIT Vs. R.L. Kalathia & Co. [2016 (1) TMI 581 - GUJARAT HIGH COURT] held that Sale of business of assessee-firm as a going concern to company for consideration of paid up share capital does not amount to transfer liable to tax as capital gains. Thus addition made on account of capital gain on revaluation of land made in the hands of the Partners are not sustainable in law and the Grounds raised by the Revenue are devoid of merits. Therefore the appeals filed by the Revenue are hereby dismissed.
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