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K.R. MURALIDHAR Versus INCOME-TAX OFFICER

2015 (11) TMI 983 - ITAT CHENNAI

Transfer of property - AO treating the capital gain as short-term capital gain - Held that:- We are conscious that the partnership firm under the common law is not a legal entity. However, under the Income-tax Act, it is a separate and distinctly assessable unit. This distinction has to be borne in mind and the partnership firm carried on its business through its partners. Therefore, for all practical purposes, under the provisions of the Income-tax Act, the partnership firm is the owner of the .....

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r of long-term capital asset. In this case, the gain arose from the transfer was short-term capital gain. Therefore, the provisions of sections 54EC and 54 are not applicable at all. - I. T. A. No. 1097 /Mds/ 2015 and S. P. No. 338 /Mds/ 2015 (assessment year 2009-10). - Dated:- 26-6-2015 - N. R. S. GANESAN (Judicial Member) and A. MOHAN ALANKAMONY (Accountant Member) R. Vijayaraghavan for the appellant. P. Radhakrishnan for the respondent. ORDER The order of the Bench was delivered by 1. N. R. .....

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ed long-term capital gain of ₹ 67,73,345 on sale of factory land and building at 141, Kottivakkam Village, Nehru Nagar, Chennai, Kancheepuram District. The assessee also claimed exemption in respect of long-term capital gain in view of the investment in Rural Electrification Corporation Ltd. bonds and investment in residential house property. The assessee also claimed short-term capital loss of ₹ 11,35,986 on account of extinction of goodwill. However, the Assessing Officer disallowe .....

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rned counsel, the assessee had taken over only the building and other assets and excluded the landed properties of the partnership firm. Learned counsel also placed his reliance on the judgment of the Madras High Court in CIT v. S. Rajamani and Thangarajan Industries [2000] 241 ITR 668 (Mad) and submitted that for transfer of landed property, the document shall be registered. Since there is no registered document, according to learned counsel, there was no transfer of property to the partnership .....

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t is mandatory for transfer of immovable property under the common law, the Income-tax Act does not require any registered document for transfer of immovable property. According to learned Departmental representative, the Income-tax Act, being a special enactment, for assessment of total income for levy of tax and collection thereof, it would prevail over the other enactments. Therefore, even though there is no registered document for transfer of property from the assessee to the partnership fir .....

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essment of capital gain either as long-term capital gain or short-term capital gain. The assessee claims that gain on the sale of the land is long term capital gain on the ground that the assessee continues to be the owner of the property, even though the same was shown as asset in the accounts of the partnership firm. The claim of the assessee appears to be that there is no registration of document executed for transfer of the property to the partnership firm. The fact remains that the land was .....

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given in other enactments. Therefore, whether there is a transfer or not is to be examined in the light of section 2(47) of the Act and not otherwise. In fact, the apex court in the case of Mysore Minerals Ltd. v. CIT [1999] 239 ITR 775 (SC) examined this issue and found that the registration of document is not an essential requirement for transfer of property under the Income-tax Act. This judgment of the apex court was not brought to the notice of the Madras High Court in CIT v. S. Rajamani a .....

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e apex court in Mysore Minerals Ltd. [1999] 239 ITR 775 (SC) is squarely applicable to the facts of the case. Therefore, when the property was shown in the accounts of the partnership firm and the partnership firm was allowed to enjoy the property as its own, there was transfer of property to the partnership firm. 5. We are conscious that the partnership firm under the common law is not a legal entity. However, under the Income-tax Act, it is a separate and distinctly assessable unit. This disti .....

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