Allowing the appeal of the assesse the Tribunal held that ; on retirement accounts of retiring partners are settled by revaluing the assets without distribution of capital assets and firm continued to the business , provision of S. 45(4) cannot be invoked . Capital gains cannot be levied on the firm .( AY. 2009-10)
Mahul Construction Corporation. v. ITO (2018) 168 ITD 120/ 164 DTR 217/ 193 TTJ 8 (Mum) (Trib.)
S. 45(4) : Capital gains – Distribution of capital asset – Revaluation of assets on retirement – On retirement the accounts are settled of retiring partners without distribution of capital assets , provisions of S. 45(4) cannot be invoked.Capital gains cannot be levied on the firm [ S. 2(47),45 ]