ACIT v. K. B. Developers ( 2021) 189 ITD 344/ (2022) 95 ITR 176 / 216 TTJ 176/ 210 DTR 317 (Kol) ( Trib)

S. 45(4) : Capital gains – Distribution of capital asset – Dissolution of firm – Additional grounds admitted -Suo motu offering gains – No documentary evidence that land contributed to firm by partners at time of formation of firm withdrawn at time of retirement — Issue requiring investigation — Additional ground cannot be admitted- Delay in filing appeal was condoned . [ S. 254(1) ]

That the assessee had suo motu offered to tax the amount of gains that arose on the transaction of retirement of partners under the head “long-term capital gains”. This could not be a case of settlement of accounts on retirement. It was not a case where the retiring partners were merely releasing or relinquishing all their rights and interest in the firm on retirement and receiving the value of one’s interest in the firm. No documentary evidence was produced before the authorities that the land contributed to the assessee-firm by the partners at the time of formation of the firm had been withdrawn by the partners at the time of retirement from the firm. No relief could be granted to the assessee in the absence of any details. The issue required investigation into fresh facts which were not on record. Therefore, the additional ground could not be admitted.( AY.2013-14)