2012 (6) TMI 716

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..... stances of the case, the Tribunal was right in law in confirming the AAC's order in which the A.A.C. had held that it was a case of distribution of assets on dissolution of partnership and no capital gains accrued to the assessee-partners in view of the provisions of Section 47(ii) of the Income Tax Act,1961? 3) Briefly, the facts leading to the present application are that the respondent/assessee was a partner in the firm of M/s. A. Kalvert & Co. constituted under the Deed of Partnership dated 9/1/1969. The other partners of the firm were the father and brother of the respondent/assessee. Thereafter disputes arose between the partners resulting in a civil suit which was ultimately settled by the High Court passing a consent decree on 12/ .....

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..... unt paid to a partner as his share on dissolution of the partnership firm cannot be regarded as transfer not only in view of the clear mandate of Section 47(ii) of the Income Tax Act, 1961 but also because such receipt of amounts and/or property does not involve an element of transfer within the meaning of the definition of the word transfer in Section 2(47) of the Income Tax Act, 1961. 6) Mr. Pardiwala pointed out that this Court in the matter of Tribhuvandas G. Patel, reported in (1978) 115 ITR 95 had taken a view that when on retirement a partner received consideration then the amount so received is to be regarded as a transfer within the meaning of Section 2(47) of the Income Tax Act, 1961, inasmuch as it could be said that the retirin .....

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..... rest can only take place upon the dissolution of the firm and/or retirement of the partner from the firm. The Supreme Court inter alia observed as under: "What the partner gets upon dissolution or upon retirement is the realization of a pre existing right or interest . It is nothing strange in the law that a right or interest should exist in presenti but its realisation or exercise should be postponed. Therefore, what was the exclusive interest of a partner in his personal asset, is upon its introduction into the partnership firm as his share to the partnership capital, transformed into an interest shared with the other partners in the asset. Qua that asset, there is a shared interest. During the subsistence of the partnership, the interes .....

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