TMI Blog2006 (4) TMI 441X X X X Extracts X X X X X X X X Extracts X X X X ..... 95 onwards. M/s. Kakatiya Hotels Pvt. Ltd. joined the firm as a third partner and brought in a capital of Rs. 12 lakhs. The company M/s. Kakatiya Hotels Pvt. Ltd. retired from partnership on 31-12-1995. At the time of retirement, the firm did not pay back the retiring partners M/s. Kakatiya Hotels Pvt. Ltd. its capital in cash but allotted a piece of land bearing municipal No. 6/137 admeasuring 2500 sq. yds. at Hanamakonda. As per the retirement/release deed dated 22-1-1996, following conditions were clearly specified therein : ( a )The firm in lieu of capital of Rs. 12 lakhs due and payable to Kakatiya Hotels Pvt. Ltd. had allotted 2500 sq. yds. of land at Hanamkonda, valued at Rs. 12 lakhs in full and final settlement. ( b )From 1-1-1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here is a transfer of property on lease of property to others and grant of lease amounts to a transfer within the meaning of section 45. ( e )As the company was already holding leasehold right over the land, the asset was already transferred by such lease and the property was in the possession of the company. Thus, there cannot be any further transfer of property or extinguishments of the right for the same. ( f )Allotment of property to retiring partners does not attract any capital gain as per the Hon ble A.P. High Court decision in the case of CIT v. G. Seshagiri Rao [1995] 213 ITR 304 and the Hon ble Supreme Court s decision in Sunil Siddharthbhai v. CIT [1985] 156 ITR 509. 2.2 The contentions raised by the assessee wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urpose of computation of capital gains. Though, no specific ground was raised by the appellant on the issue of assumption of jurisdiction by the ld. CIT under section 263 of the Act, the ld. counsel of the assessee argued that the assessment order was not erroneous or prejudicial to the interest of revenue in the facts of the present case. In support of the above, following case laws were cited by him. (1) Smt. Durdana Khatoon v. Dy. CIT [2005] 93 ITD 15 (Hyd.); (2) Dy. CIT v. Jitendra Prasad [2003] 131 Taxman 181 (Mad.)(Mag.); (3) CIT v. Kunnamkulam Mills Board [2002] 257 ITR 544 (Ker.). It was also argued by him that there should be a registered deed for a transaction if it is to fall within the ambit of the definition o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aws cited before us. In Jitendra Prasad s case ( supra ) it was held by the Tribunal that when two partners retired from the firm and in consideration of the retirement, land and building belonging to the firm were allotted to them, section 45(4) was inapplicable insofar as there was no dissolution of the firm and the allotment of land and building to retiring partner was not a device to reduce tax. Further, it is noticed that Hon ble Madras High Court s decision in the case of CIT v. Bharani Pictures [1981] 129 ITR 244 was not considered by the Bench. It is also noticed that the implication of the wordings "on the dissolution of firm or other association of persons or body of individuals....or otherwise" was also not argued by the pa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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