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2015 (3) TMI 637 - AT - Income TaxReopening of assessment - assessing the total income at ₹ 93,30,260/-, by bringing the transfer value of the ‘goodwill’, i.e., by the assessee-firm to its partners on its dissolution on 01.04.2006 to tax, as against the returned income of nil - CIT(A)held the condition of section 47(xiii) was satisfied, so that it would not be a transfer liable for charge of capital gains u/s.45 of the Act - whether CIT(A) in allowing relief to the assessee, admitted additional evidence, in contravention of Rule 46A of the Income Tax Rules, 1962 - Held that:- While the A.O.’s objection, with reference to the terms of the conversion deed dated 01.04.2006, was that the shares in the successor company stood allowed to the erstwhile partners in their profit sharing ratio in the firm, the ld. CIT(A) found it as not so; the shares being allocated in the ratio of their capital balances as on the date of the conversion, i.e., in terms of section 47(xiii). Both the conversion deed and the allocation of shares, as well as the firm’s balance-sheet, both as on 31.03.2006 and 01.4.2006, were before the A.O., whose objection was on merits. Qua merits, the conversion deed clearly states that the partners shall be allotted shares as per the profit sharing ratio as on the date of conversion (i.e., 01.04.2006) (refer clause 2). With regard to the allotment, the actual allotment would prevail over that specified in the conversion deed, recording agreement qua share allocation in the profit sharing ratio. A contract can, besides being reduced in writing, also be oral and, therefore, to the extent the subsequent allotment, being undisputed, is at variance with that agreed to, could only be considered as a novation or in modification of the written agreement to that extent. This is as the allotment would only have been returned, as stated before us, to the Registrar of Companies, so that all the legal formalities of registration of the said allotment stand completed, finalizing the allotment process. We are therefore, in principle, in agreement with the assessee that the mention of a different ratio in the conversion deed would not be by itself fatal to its case; what being relevant is the actual satisfaction, or not so, of the conditions of section 47(xiii). - Decided against revenue.
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