TMI Blog1997 (1) TMI 154X X X X Extracts X X X X X X X X Extracts X X X X ..... ore, the firm was dissolved by operation of law. The business of the dissolved firm was taken over by the assessee w.e.f. 17-12-1990. The Assessing Officer was of the view that on the dissolution of the firm, the capital gain arose to the assessee under section 45(4) of the Act in respect of assets held by the firm, because, according to him, there was a distribution of capital assets on the date of dissolution. He therefore, computed the fair market value of the plot at Rs. 5,39,600 and deducted the cost of the land, i.e., Rs. 3,59,700. Thus, the capital gain was computed at Rs. 1,79,900. Similarly, the capital gain in respect of plant and machinery and building was computed at Rs. 10,000 each. Thus, the total capital gain was Rs. 1,99,900 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition could be sustained to the extent of assessee's share in the income of the partnership firm as it was a mere mistake committed by the Assessing Officer. Lastly, it was submitted by him that the fact that the property allotted to the assessee-firm by the M.I.D.C. could not be transferred without its prior permission is not relevant for deciding the issue. 4. The rival submissions of both the parties have been considered carefully. In our opinion, the contention of the assessee that assuming the provision of section 45(4) applies even then, the income alleged to arise under the provision of section 45(4) cannot be assessed in the hands of the assessee, has force. We have gone through the provision of section 45(4) and bare reading of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . We find that section 67 specifically deals with the assessment of the partner of the firm. This section provides the manner in which the income of the partner of the firm is to be determined. Sub-section (1) provides that the income of the firm computed shall be subject to certain adjustments as provided in clause (a) of sub-section (1) and then, the same shall be apportioned among the partners. Clauses (b) and (c) then provide that the amount of profit or loss so apportioned shall be increased or decreased as the case may be by the amount of salary, interest, commission or other remuneration paid to the partner. The amount so arrived at shall be treated as partner's share in the income/loss of the firm. Sub-section (2) further provides t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is because of such provision, the Court held that the partners could be assessed directly without assessing the firm. The decision of the Allahabad High Court was delivered on the basis of the Supreme Court decision in the case of CIT v. Murlidhar Jhawar Purna Ginning Pressing Factory [1966] 60 ITR 95. Since the option which was available to the Assessing Officer is not now available under section 4 of the 1961 Act, that decision cannot be applied to the present case. The view which we have taken is also fortified by the recent decision of the Supreme Court in the case of ITO v. Ch. Atchaiah [1996] 218 ITR 239, wherein it has been held as under : " Under the present Act, the ITO has no option like the one he had under the 1922 Act ..... X X X X Extracts X X X X X X X X Extracts X X X X
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