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2016 (10) TMI 688 - ITAT DELHICapital gain - distribution of capital assets on the dissolution of firm - whether capital gain arose to the assessee firm on transfer of assets to the outgoing partners cannot be taxed? - Held that:- The transfer of capital assets to the outgoing partners was made by way of book entries to the respective accounts of the outgoing partners and other formalities as required under the Registration Act was carried on from the period starting from 1.4.2008 to 31.3.2009 pertaining to A.Y 2009-10. Therefore, capital gain accrued to the firm on transfer of assets to the outgoing partners has to be taxed u/s 43(4) of the Act in A.Y 2008-09 and thus we cannot uphold the action of the AO as well as the impugned order. We are thus unable to see any valid reason to interfere with the assessment order wherein it has been held that capital gains accrued to the firm on transfer of capital gains assets to the outgoing partners is taxable in A.Y 2009-10. We are, therefore, inclined to hold that the grounds raised by the assessee are devoid of merits and hence we dismiss the same. Calculating the full value of consideration in respect of land and building transferred on dissolution in an arbitrary manner without referring the matter to the valuation officer u/s 55A r.w.s 142A - Held that:- AO by way of issuing show cause notice to the assessee showed his intention to calculate capital gains for A.Y 2009-10 and the assessee did not object to the applicability of the Collector rate in calculation of capital gains and the assessee only stressed upon to take collector’ prevailing market rate on or before 31.3.2008 which could have been applied to the case of A.Y 2008-09 and this action of the AO was correct and as per provisions of the Act. There was no need to refer the matter to the valuation officer u/s 55A of the assessee Act, as such. Accordingly, Ground being devoid of merits is dismissed. Capital gain on the shellar building - Held that:- CIT(A) upheld the addition merely by observing that the assessee had failed to cooperate in furnishing details as called by the AO, therefore, addition of ₹ 2 lakhs as capital gain on the shellar building is considered reasonable. From the orders of the authorities below and conclusion drawn by them, as noted above, we are of the considered opinion that this estimated adhoc addition has been made on the Nilokheri building for which addition on account of capital gain was estimated at ₹ 46,74,280/- as per para 4 of the assessment order. From para 5, we further note that the AO made addition of ₹ 2 lakhs by alleging that the assessee should have furnished details of measurement of the building and the assessee has failed to disclose the detai ls of value of construction which cannot be basis for making addition of ₹ 2 lakhs treating the same as capital gain on transfer of building for which capital gain has already been assessed in para 4 of the assessment order. Thus addition made by the AO is directed to be deleted
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