No transfer on conversion of firm into private limited company and no liability to pay capital gains tax on same

CADD Centre Vs ACIT (Madras High Court)

Conclusion: When partnership firm was transformed into private limited company, there was no distribution of assets and as such, there was no transfer and therefore, assessee was not liable to pay any tax on capital gains.

Held: During the year, partners of  assesse-firm felt the necessity of having a corporate identity and therefore, decided to incorporate a Private Limited Company and vest the business of the Firm

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