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2014 (8) TMI 203 - HC - Income TaxTransfer of goodwill to partners - reconstruction of firm - transfer - extinguishment of right - AO noticed that assessee firm had created and self-generated assets in the form of goodwill and transferred it to the current accounts of the four partners proportionately consequent to reconstitution of assessee firm - Whether there was transfer or not and in view of the circular of CBDT notional transfer cannot be subject to taxation Held that:- The assets of the partnership was revalued and for the first time they valued the goodwill at ₹ 7,59,28,000 - No portion of the goodwill is transferred to the retiring partners, there is no transfer of the capital asset Tribunal rightly was of the view that if there is no transfer of capital asset, Section 45(4) is not attracted - the partnership firm did not cease to hold the property - its right to the property is not extinguished - the retiring partners did not acquire any right in the property as no property was transferred in their favour thus, the order of the Tribunal is upheld Decided against Revenue.
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