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2016 (2) TMI 626 - AT - Income TaxAddition u/s 68 - Held that:- The assessee not only gave the confirmation but also furnished the balance sheet of the creditors and also the acknowledgement of the filing of income tax return by the creditors. Therefore, if the Revenue was not satisfied about the creditworthiness of the creditors, it could have examined the creditors as they were assessed to income tax and all particulars relating to them were with the Assessing Officer. Addition deleted - Decided in favour of assessee Addition on account of long term capital gain - applicability of 45(4) - Held that:- Section 45(4) of the Act would be applicable if there is transfer of capital asset by way of distribution of capital asset on dissolution of firm or otherwise. Such profit and gain would be chargeable to tax as income of the firm in the previous year in which said transfer took place and, for the purpose of Section 48, the fair market value of the asset on the date of such transfer shall be deemed to be full value of the consideration received or accrued as a result of such transfer. However, the sine qua non of the applicability of this Section is the transfer of capital asset by way of distribution of capital asset. In the case under appeal before us, it has not been pointed out by the Assessing Officer or the learned DR whether there was any distribution of capital asset. The Assessing Officer levied the capital gain tax in respect of land but the land was owned by the partnership firm before and after the change in the constitution of the firm. Admittedly, land was not distributed amongst the three partners who retired from the partnership firm. When there was no distribution of the capital asset viz., land, Section 45(4) would not be applicable. Though both the parties have relied upon some judicial pronouncements in support of their arguments but, in our opinion, when the basic facts with regard to transfer of capital asset by way of distribution of capital asset is not fulfilled, Section 45(4) is not applicable. - Decided in favour of assessee
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