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2004 (2) TMI 28 - DELHI HIGH COURTCapital gain - Mode of settlement of accounts between partners - "1. Whether, the assets recovered by virtue of the decree of the High Court, was in satisfaction of the loan inclusive of interest allegedly due to the assessee from the partnership and it became a part of the stock-in-trade of the assessee? 2. Whether, the assessee was entitled to set off the liabilities of partnership in the computation of the capital gain and if so, to what extent?" - it is clear that where the capital asset became the property of the assessee on dissolution of a firm then the cost of acquisition is deemed to be the cost for which the previous owner of the property acquired it. In the instant case the property was acquired by the partnership firm and hence cost of acquisition by firm is to be considered. The written down value as per balance-sheet is required to be taken into consideration which in the instant case has been taken into consideration. There is no provision for entitlement to set off the liability of the partnership in the computation of capital gain – Hence both questions are answered in favour of the Revenue
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