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2020 (2) TMI 1433 - AT - Income TaxCapital gains on the amount of revaluation of assets - rearrangement of partnership deed - AO held that the outgoing three partners have drawn the amounts from the Capital and retired from the firm, thus whole process constitutes a deemed dissolution of the firm u/s. 45(4) and accordingly he has brought the difference of WDV as on 01-04-2010 and 31-03-2011 as income of the Respondent Firm from Long Term Capital Gains - whether the word “Otherwise” appearing in the phrase “Distribution of capital asset on dissolution of the firm or otherwise” would include retirement of partner also? - HELD THAT:- Even if the retirement is assumed to be covered within the ambit of expression ‘otherwise’ Section 45(4) will not apply to retirement where only money value of the partner’s interest in the firm is paid to the outgoing partner and no specific asset is distributed or transferred to the outgoing partner, because the firm continues to own the asset and for Section 45(4) to attract, the firm should cease to be the owner of the asset. In the present case, the assets of the firm continued to be owned by the same firm and the outgoing partners are not taken away any asset in its physical form. Being so, in our opinion, Section 45(4) of the Act could not be applied. Accordingly, we dismiss the ground of the appeal taken by the revenue.
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