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2010 (12) TMI 754 - HC - Income TaxSale of partnership firm as going concern after its dissolution - Computation of capital gain - Slump sale - Sale of the business of the firm as a going concern - Relinquishment of right - Held that:- once the partnership is dissolved, the partners would become entitled to specific share in the assets of the firm which is proportionate to their shares in sharing the profits of the firm and they are placed in the same position as tenants in common and for the purpose of dissolution and under section 47 of the Indian Partner- ship Act, 1932, it is clear that even after the dissolution of the firm, the authority of each partner to bind the firm and the other mutual rights and obligations of the partners continues notwithstanding the dissolution so far as may be necessary to wind up the affairs of the firm and to complete transactions begun but unfinished at the time of the dissolution. After dissolution of the firm on December 6, 1987, the firm has never filed any return and in view of the order of this court permitting the partners to carry on the business in the interest of employees, return was filed by AOP-13 consisting of the erstwhile 13/12 partners for accounting profits and seeking depreciation in the assets of the firm. AOP-3 have purchased the business of the old firm - the appellants as erstwhile partners are liable to pay capital gains tax on the amounts received by them towards the value of their shares in the net assets of the firm and are liable for payment of capital gains under section 45 of the Act. - Answered the substantial question of law in favour of the Revenue and against the assessee. Slump sale - Held that:- contention of the assessee that the sale is in the nature of slump sale and is not in respect of the separate valuation made and, therefore, not assessable to capital gains cannot also be accepted as it is clear from the perusal of the material on record that the sale that was conducted on the direction of this court among the partners and the consideration received by sale was not by slump sale as the shares of all the partners in the firm which were fixed in proportion to the profit-sharing ratio after the dissolution of the firm and they continued the business as an AOP and not as partners. - Decided in favor of revenue.
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