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2009 (7) TMI 738 - HC - Income TaxCapital Gain - The assessee-firm was carrying on the business of maintaining a cinema theatre. It had partners who were entitled to share the profits of the firm. The firm filed its return of income for the year 1995-96 and declared a loss of Rs. 2,60,104. However, the Assessing Officer issued notice under section 143(3) read with section 147 of the Act calling upon the assessee to file its revised return on the premise that the assessee had not declared the income attributable to the transfer of capital assets resulting in capital gain. He held that firm was liable to be assessed on the gains attributable to the transaction which was the amount brought in by the partners and shared amongst the earlier partners. The Tribunal took the view that there was no dissolution of the firm, whereupon the assets had been transferred to the partners of the firm, and as there was no dissolution, section 45(4) of the Act was not attracted. Held that - the Assessing Officer had rightly indicated that the series of transaction such as reconstitution of firm twice, once in July, 1994, and again in December, 1994 and entire assets retained in the hands of newly added two partners though all along the assets of the firm continued in the hands of the firm. Therefore, there was transfer of capital assets within the meaning of section 2(47) attracting capital gain tax in terms of section 45(4) of the Act.
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