Section 45(4) is not applicable on reconstitution of partnership firm

PCIT Vs Electroplast Engineers (Bombay High Court)

Conclusion: Where partnership was reconstituted due to entrance of new partners who brought cash by way of capital contribution and the retiring partners take cash and retire, there was thus no dissolution of the firm and no distribution of capital asset. What was given to the retiring partners was money representing the value of their share in the partnership and no capital asset was transferred on the date of retirement. The

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