TMI Blog2016 (2) TMI 799X X X X Extracts X X X X X X X X Extracts X X X X ..... artners of the partnership firm, got converted into another form. Hence, this is not a case where there was either a transfer of a capital asset or the distribution of a capital asset. This aspect has been completely lost sight of by all the Authorities. - Decided in favour of assessee - Tax Case Appeal No. 348 of 2007 - - - Dated:- 8-2-2016 - V. Ramasubramanian And N. Kirubakaran, JJ. For the Appellant : Mr. V. S. Manoj For the Respondent : Mr. J. Narayanaswamy JUDGMENT This tax case appeal, filed by the assessee under Section 260A of the Income Tax Act, 1961, was admitted on the following two substantial questions of law : (i) Whether on the facts and circumstances of the case, the Tribunal was right in law in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r natural partners were allotted shares in the private limited company. 5. For the assessment year 1991-92, the partnership firm returned an income of ₹ 8,44,620/-. The Assessing Officer came to the conclusion that there was a transfer of assets by way of distribution of capital assets on the dissolution of the firm and that therefore, the provisions of Section 45(4) were not attracted. Consequently, the Assessing Officer included the short term capital gains and made a demand. 6. The partnership firm filed a first appeal before the Commissioner of Income Tax (Appeals). The Appellate Authority concluded that there was no dissolution of the firm and hence, the provisions of Section 45(4) were attracted. The Revenue filed an appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e deemed to be the full value of the consideration received or accruing as a result of the transfer. 8. For attracting Section 45(4), the following conditions are to be satisfied : (i) profits and gains should arise (ii) from the transfer of a capital asset (iii) by way of distribution of capital assets (iv) on the dissolution of a firm or other association of persons or body of individuals not being a company or a cooperative society and (v) or otherwise. 9. Unless these conditions are satisfied, Section 45(4) would not get attracted. Every distribution of capital assets may not lead to the attraction of Section 45(4) unless it happens on the dissolution of a firm or other entity. Similarly, every distribution of ca ..... X X X X Extracts X X X X X X X X Extracts X X X X
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