TMI Blog2022 (2) TMI 287X X X X Extracts X X X X X X X X Extracts X X X X ..... et recorded in the books of account of the firm. The value so recorded is statutorily deemed to be the full value of consideration received or accruing to the partner as a result of the transfer of the capital asset to the firm. Thus, Section 45(3) does not seek to substitute by any other figure the value agreed between the partners at which the asset is transferred by a partner to the firm. Tribunal agreed with CIT(A) that after conversion of inventory into fixed asset the firm revalued the developed land including construction thereon in order to bring it in line with the current market value to justify the business assistance secured by the firm from the banks to extent of nearly ₹ 250 crores. Therefore, on facts the tribunal co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Income Tax Act, (the Act) is directed against the order of the Income Tax Appellate Tribunal C Bench Kolkata (Tribunal) dated 26th September, 2018 in ITAT/569/Kol/2015 for the assessment year 2006-07. The revenue has raised the following substantial questions of law for consideration. 1. Whether on the facts and circumstances and points of law, the Learned Income Tax Appellate Tribunal was committed substantial error of law and justified by ignoring the detailed factual discussions in the assessment order wherein the Assessing Officer made observations about the adoption of colourable devices to avoid paying taxes, in the light of the Judgment of the Hon ble Supreme Court of India in Mcdowell Co Ltd - vs- CTO (1985) 154 IT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sulting in any pecuniary gain which can form subject matter of taxation. Ultimately by a well reasoned order, the CIT(A)allowed the appeal filed by the assessee. Aggrieved by the same, the revenue preferred the appeal before the tribunal. The tribunal firstly considered the validity of the reopening of the assessment under section 147 of the Act. After elaborately considering the facts the tribunal held that, if at all any income accrues or arises owing to such revaluation, it is an issue which had to be dealt with in the assessment of the firm M/S. Salapuria Soft Zone which is the separate taxable entity. After noting the facts the tribunal held that in terms of the Section 10 (2A) of the Act partners share in the total income of the firm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... March 31, 2008. Section 45(3) of the Act is applicable in the year of transfer by the partner of his capital asset to the partnership firm by way of capital contribution. In the instant case, the year of transfer was the financial year ended March 31, 2006. The ITO was wholly unjustified in invoking Section 45(3) which had no application in the assessment year 2008-09 or for that matter in the assessment year 2006-07. Even otherwise, Section 45(3) seeks to determine the capital gains with reference to the value of the asset recorded in the books of account of the firm. The value so recorded is statutorily deemed to be the full value of consideration received or accruing to the partner as a result of the transfer of the capital asset to the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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