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IV. Direct Tax Case law:
M/s Bharat Ginning & Pressing Factory Vs. ITO, ITA Nos. 2404-2408/Ahd/2007, Date of Decision: 12.04.2013, ITAT- Ahmedabad
Issue-1
Decision: In favour of revenue
Section: 153C of Income Tax Act, 1961
Case referred: CIT vs. Panchajanyam Management Agencies & Services [2011] 333 ITR 281 (Ker.)
Whether
separate satisfaction is required to be recorded in order to intiate
proceedings u/s 153C where books of account of firm are found at the
premises of partner.
Held No,
for initiating proceeding u/s.153C of the Act where books of account of
firm are found and seized from the search place of the partner of the
firm, it is not necessary that these books of account should be
incriminating. The A.O. is fully empowered to initiate proceeding u/s.
153C of the IT Act against the firm i.e. other person. No separate
satisfaction is required to be recorded.
Issue-2
Decision: In favour of revenue
Section: 45(4) of Income Tax Act, 1961
Case referred: CIT v A. N. Naik Associates [2004] 265 ITR 346 (Bom.)
Whether section 45(4) of the Act is attracted in case of
retirement and admission of some partners even though the same firm
continues.
Held Yes,
the expression ‘otherwise’ as used in section 45(4) of the Act has to
be read with the words transfer of the capital assets. It becomes clear
that even when a firm is in existence and there is a transfer of capital
assets, it comes within expression ‘otherwise’. The word ‘otherwise’
takes into sweep not only cases of dissolution but also cases of
subsisting partners of partnership transferring assets to a retiring
partner.
In
this case, there was a family settlement and there was a retirement as
well as induction on a new partner and assets of the partnership
transferred to the retiring partner would amount to the transfer of
capital assets in the nature of capital gain and business profit which
were chargeable to tax u/s.45(4) of the IT Act.
(Please click here for judgment)
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