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2013 (11) TMI 731 - HC - Income TaxTransfer of property from old firm to the new firm - Whether the firm should be made liable to pay capital gains even when there is no distribution of capital asset/assets among the partners under Section 45(4) of the I.T. Act – Retiring partner taking out money towards his share - In the instant case, the partnership firm did not transfer any right in the capital asset in favour of the retiring partner. The partnership firm did not cease to hold the property and consequently, its right to the property is not extinguished. Conversely, the retiring partner did not acquire any right in the property as no property was transferred in their favour – The instant case is distinguished from the following case namely, Commissioner of Income Tax And Another Vs. Gurunath Talkies [2009 (7) TMI 738 - KARNATAKA HIGH COURT] and Commissioner of Income Tax Vs. A.N.Naik Associate -[2003 (7) TMI 46 - BOMBAY High Court], wherein it was held that assessee in that case is also liable to pay capital gains tax under Section 45(4). As in the present case there is no distribution of assets and hence, one of the condition precedent for invoking Section 45(4) does not exist and hence Section 45(4) is not attracted to the facts of this case - When a retiring partner takes only money towards the value of his share and when there is no distribution of capital asset/assets among the partners there is no transfer of a capital asset and consequently no profits or gains is payable under Section 45(4) of the Income Tax Act – Decided against the Revenue.
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