Case Law Details
MDLR Builders (P) Ltd. Vs DCIT (ITAT Delhi)
Conclusion: When a retiring partner took only money towards the value of his share on retirement and when there was no distribution of capital asset/ assets going to the partners, there was no transfer of capital asset and consequently no profits or gains was chargeable u/s. 45 (4).
Held: AO taxed short term capital gain on account of transfer of shares in the partnership firm by assessee company to M/s. V Limited. According to AO, the partnership share in a firm was a capital asset within the meaning of section 2 (14) and their transfer was transfer of capital asset within the meaning of section 2 (47).The contention of assessee that no capital gain arose on sum received by a partner on retirement from the partnership firm was not accepted by AO on the ground that assessee had applied an unsuccessful technique to transfer his capital gain into its account from partnership firm without giving any tax. It was held when assessee in the capacity of retiring partner took only money towards value of its share and no capital asset was distributed there was no transfer of capital asset and, therefore, assessee was not liable to any capital gain tax on account of sum received by it as a partner on retirement from partnership-firm.
FULL TEXT OF THE ITAT JUDGEMENT
The above two appeals filed by the respective assessees are directed against the separate orders dated 27.11.2018 of the CIT(A)-26, New Delhi relating to A. Y. 2008-09. Since identical grounds have been taken by the respective of assessees in these appeals, therefore, these were heard together and are being disposed of by this common order.
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