TMI Blog2016 (3) TMI 1128X X X X Extracts X X X X X X X X Extracts X X X X ..... axable under the head business income but rather the income should be exigible to tax under the head Income from Capital Gains and the indexed cost of acquisition of the capital asset should be deducted from the full value of consideration computed under section 48 of the Act. - Decided against revenue - ITA No. 3052/Mum/2014 - - - Dated:- 16-3-2016 - Shri Jason P. Boaz, Accountant Member and Shri Sandeep Gosain, Judicial Member Appellant by: Shri Javed Akhtar O R D E R Per Jason P. Boaz, A.M. This appeal by the Revenue is directed against the order of the CIT(A)- 34, Mumbai dated 28.02.2014 for A.Y. 2010-11. 2. The facts of the case, briefly, are as under: - 2.1 The assessee firm, engaged in the manufac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... property as per the provisions of section 2(47) of the Act. The AO did not accept the explanations put forth by the assessee as he was of the view that the provisions of section 45(4) of the Act were applicable in view of the following reasons: - (i) There was a change of 50% in the constitution of the assessee firm by Deed of Assignment dated 17.12.2009. (ii) That there is a transfer of capital assets, i.e. transfer for leasehold rights by the firm to its retiring partners. (iii) There is a transfer of capital asset in the case on hand as it falls within the ambit of the expression otherwise in section 45(4) of the Act, as the firm ceases to have a right or its right in the property stands extinguished and in favour of the part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al vide the impugned order dated 28.02.2014. 4. This appeal was fixed for hearing on five occasions and on all the scheduled dates, none was present on behalf of the assessee. It appears that even the notices for hearing sent by RPAD on three occasions have returned back unserved from the assessee s given address. In these circumstances, we proceed to dispose off this appeal with the assistance of the learned D.R. for Revenue and the material on record. 5. Aggrieved by the order of the CIT(A)-34 dated 28.01.2014 for A.Y. 2010-11, the assessee had preferred this appeal raising the following grounds: - 1. On the facts and in the circumstances of the case and in law, the Ld. ClT(A) erred in deleting the addition of ₹ 37,78,250/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... artners with 25% share each in the profits and losses of the firm. On 01/09/2008, two partners retired and two new partners were admitted in the appellant firm with 25% share each in the profits and losses of the firm. The appellant firm had acquired leasehold rights in respect of a MTDC land in Ambad, Nashik under deed of assignment dated 27/03/2001. As per the rules and regulations of the MIDC, the appellant firm drafted a new deed of assignment on 17/12/2009 in respect of change in constitution of the firm and paid stamp duty on the same. The Authorised Representative of the appellant has argued that the partners of the firm retired on 01/09/2008 i.e. during the year ended 31.03.2009 i.e. A.Y. 2009-10 and so the question of applicability ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s only money towards the value of his share and when there is no distribution of capital asset/assets among the partners there is no transfer of a capital asset and consequently no profits or gains is payable under Section 45(4) of the Income Tax Act . The contention of the appellant is correct as there is no consideration paid to. the retiring partners and the assets of the firm are continued with the firm. So the Provisions of Section 45(4) do not operate. I agree with the following contentions of the Authorised Representative of the appellant: a) The provisions of Section 45(4) of the I.T. Act, 1961 are not applicable as there is no retirement of partners during the year ended 31.03.2010 i.e. A.Y. 2010-11. b) There is no transfer o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 45(4) of the Act are not applicable for the year under consideration, i.e. A.Y. 2010-11 as there is no retirement of any partner during this period. (ii) there is no transfer of leasehold rights in the said property by the assessee firm to the retiring partners; which continue to stay vested in the assessee firm even after the change in the constitution of the assessee firm. (iii) as per the provisions of section 45(4) of the Act the income is not to be taxable under the head business income but rather the income should be exigible to tax under the head Income from Capital Gains and the indexed cost of acquisition of the capital asset should be deducted from the full value of consideration computed under section 48 of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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