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2018 (12) TMI 217 - HC - Income TaxLiability to capital gains tax - dissolution of the firm as on 31st March 2002 - Held that:- On perusal of the audited balance sheet of the partnership firm as on 31.03.2002, and the balance sheet of the de-merged as well as the existing business as on 1st April 2002, concluded that the audited accounts of the assessee firm as on March 31, 2002 shall be the basis for de-merging the business in to an independent unit and it is clear that the de-merger of business has not taken place on 31.03.2002. CIT(A) held that there is a mention of three balance sheets, i.e., the assessee's as on 31.03.2002 and the assessee's de-merged business as on 01.04.2002 and that the later two balance sheets came into existence only on 01.04.2002 and not on 31.03.2002. After appreciating the documents placed before it, the CIT(A) held that the assessee firm was never dissolved much less on 31.03.2002 and on the other hand, got itself re-constituted with three of the continuing partners and therefore, the case is squarely covered by Section 187(2) of the Act. Further, the assets and liabilities relating to the civil construction business remained with the assessee firm and were not distributed among anybody. Even the assets and liabilities relating to the software education business and real estate project were not distributed among any partners but, were transferred to a new firm and transfer of a business should be construed as distribution of assets and liabilities among the partners. We are of the clear view that the decision in the case of A.L.A. Firm [1991 (2) TMI 1 - SUPREME COURT] which was heavily relied upon by the learned counsel for the Revenue, can have no application to the case on hand - the partnership firm deed dated 03.08.2005, is a good piece of evidence to show that the assessee firm continued to be in existence after re-constitution, that is, even after 31.03.2002 without getting dissolved. Tribunal erred in reversing the order passed by the CIT(A) and therefore, the order passed by the Tribunal calls for interference. - Decided in favour of the assessee
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