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II. Direct Tax Case laws:
1. CIT vs Dynamic Enterprises, ITA No. 1414/2006, Date of Order: 16.09.2013, High court of Karnataka.
Provisions
of S. 45(4) does not apply if the retiring partner takes only money
towards the value of his share, without distribution of capital assets
between partners.
In order to attract s. 45(4), the conditions precedent are
(1) there should be a distribution of capital assets of a firm;
(2) such distribution should result in transfer of a capital asset by firm in favour of the partner;
(3) on account of the transfer there should be a profit or gain derived by the firm and
(4) such distribution should be on dissolution of the firm or otherwise.
In other
words, the capital asset of the firm should be transferred in favour of a
partner, resulting in firm ceasing to have any interest in the capital
asset transferred and the partners should acquire exclusive interest in
the capital asset.
On facts,
where the partnership firm purchased the property and it was not in the
name of any partner. No partner brought that capital asset as capital
contribution into the firm. Also, there was no dissolution of the firm
because the firm continued to exist even after the retirement of some
partners. What was given to the retiring partners is cash representing
the value of their share in the partnership. No capital asset was
transferred on the date of retirement. In the absence of distribution of
a capital asset and in the absence of transfer of capital asset in
favour of the retiring partners, no profit or gain arose in the hands of
the partnership firm and so the question of the firm being assessed u/s
45(4) would not arise;
(Please click here to view the Judgment)
2.
Commissioner of Income-tax, Allahabad v. Model Exims Kanpur, IT A NO.
164 OF 2011, Date of order : 10.09.2013, High court of Allahabad.
Where
circular effective at relevant time exonerate assessee from TDS
obligation on payment to non-resident, subsequent circular would not
create such an obligation retrospectively
Held Yes
Assessee
paid commission to foreign agents on which it did not deduct TDS in view
of Circular Nos. 23 of 1969, 163 of 1975 and 786 of 2000, Revenue made
disallowance of expenditure under section 40(a)(i) holding that it was
mandatory obligation as Circular No. 7 of 2009 had withdrawn earlier
circulars. The department could not have taken different stand in
subsequent years or assessment year 2007-08, when the circulars were
operative and were not withdrawn. Circular No.7 of 2009 dated 22.10.2009
withdrawing earlier circulars became operative only from 22.10.2009.
(Please click here to view the Judgment)
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