Home Case Index All Cases Income Tax Income Tax + SC Income Tax - 2016 (10) TMI SC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2016 (10) TMI 704 - SC - Income TaxPartnership firm - Nature of the Certain considerations received after the dissolution of the firm - Slump sale or not - capital gain - Goodwill - it was contended that at the time of dissolution of firm, capital gain was not taxable, hence not capital gain can be taxed on subsequent receipts - the assets which were sold ultimately on November 20, 1994 were of a dissolved partnership firm, though as a going concern. Held that:- The partnership firm had dissolved and thereafter winding up proceedings were taken up in the High Court. The result of those proceedings was to sell the assets of the firm and distribute the share thereof to the erstwhile partners. Thus, the 'transfer' of the assets triggered the provisions of Section 45 of the Act and making the capital gain subject to the payment of tax under the Act. The appellants as erstwhile partners are liable to pay capital gain on the amount received by them towards the value of their share in the net assets of the firm are liable for payment of capital gains u/s 45 of the Act. - Decision of High Court [2010 (12) TMI 754 - Karnataka High Court] in favor of revenue confirmed. Valuation of goodwill - Insofar as argument of the assessees that tax, if at all, should have been demanded from the partnership firm is concerned, we may only state that on the facts of this case that may not be the situation where the firm had dissolved much before the transfer of the assets of the firm and this transfer took place few years after the dissolution, that too under the orders of the High Court with clear stipulation that proceeds thereof shall be distributed among the partners. Insofar as the firm is concerned, after the dissolution on December 06, 1987, it had not filed any return as the same had ceased to exist. Even in the interregnum, it is the AOP which had been filing the return of income earned during the said period. Thus the arguments that valuation of goodwill was wrongly done may also not survive. In any case, we find that no such plea was taken by the assessees in the High Court or before the Tribunal or lower authorities. Allow the appeals partly only to the extent that business income/revenue income in the Assessment Year in question is to be assessed at the hands of AOP-3, in terms of the orders of the High Court, as AOP-3 retained the tax amount from the consideration which was payable to the assessees herein and it is AOP-3 which was supposed to file the return in that behalf and pay tax on the said revenue income. Insofar as the appeals preferred by the Revenue are concerned, they arise out of the protected assessment which was made at the hands of the partnership firm. As we have upheld the order of the Assessing Officer in respect of payment of capital gain tax by the assessees herein, these appeals are rendered otiose and are disposed of as such.
|