TMI Blog2006 (8) TMI 142X X X X Extracts X X X X X X X X Extracts X X X X ..... - When Parliament in its wisdom has chosen to remove a provision, which provided fIno transfer", there is no need for any further amendment to section 2(47) as argued before us. In our view, despite no amendment to section 2(47), in the light of removal of clause (ii) to section 47, the transaction certainly would call for tax at the hands of the authorities. - we deem it proper to answer the question under reference in favour of the Revenue - - - - - Dated:- 4-8-2006 - Judge(s) : R. GURURAJAN., JAWAD RAHIM. JUDGMENT The judgment of the court was delivered by R. GURURAJAN J.-M/s. Suvardhan of Bangalore is before us seeking an opinion in the light of the order of the Tribunal in I.T.A. No. 405/Bang/1997, dated December 22, 1997. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ?" Heard Sri Parthasarathi, learned counsel appearing for the appellant. He would invite my attention to section 45(4) of the Income-tax Act to contend that the order of the Tribunal requires our consideration. He would also refer to section 2(47) for the definition of "transfer" in the case on hand. He wants both the provisions to be read together for the purpose of "no transfer" in the case on hand. He would also rely on a number of judgments in support of his submission. Per contra, Sri M. V. Seshachala, learned counsel for the Department would support the order. After hearing, we have carefully gone through the material placed on record. As we mentioned earlier, it is seen that the partnership stood dissolved on April 1, 1992. Nil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h profit up to that date in one or more instalments. The dissolution deed also would show that the retiring partner has no objection whatsoever in the assessee continuing its business in the same name either as sole proprietrix in any other manner as she may think fit. The authorities, after noticing the same, have come to the conclusion that there is a transfer in the case on hand. The assessee in terms of the materials placed on record has taken over the entire assets and liabilities of the partnership firm, as rightly ruled by the authorities. Section 45(4) of the Income-tax Act, 1961 reads as under: "The profits or gains arising from the transfer of a capital asset by way of distribution of capital assets on the dissolution of a f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f capital assets on the dissolution of a firm, body of individuals or other association of persons." This was omitted by the Finance Act, 1987 with effect from April 1, 1988. Therefore, in our view, any transaction resulting in distribution on dissolution of a firm has to be considered as "transfer" in terms of section 47. In the light of omission of clause (ii) of section 47 prior to April 1, 1988, it cannot be said that section 45 is inapplicable to the facts in the case on hand as argued by Sri Parthasarathi. Sri Parthasarathi, learned counsel, however, would rely on a judgment of the Madhya Pradesh High Court in CIT v. Moped and Machines [2006] 281 ITR 52. In the said judgment, there is no reference to omission of clause (ii) of sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r." The Bombay High Court has noticed section 2(47) and thereafter ruled reading as under: "The Finance Act, 1987, with effect from April 1, 1988, omitted this clause, instead of amending section 2(47), the effect of which is that distribution of capital assets on the dissolution of a firm would be regarded as transfer." We are in respectful agreement with the judgment of the Bombay High Court. When Parliament in its wisdom has chosen to remove a provision, which provided fIno transfer", there is no need for any further amendment to section 2(47) of the Act as argued before us. In our view, despite no amendment to section 2(47), in the light of removal of clause (ii) to section 47, the transaction certainly would call for tax at the h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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