Dismissing the review petitions of the assessee, the Supreme Court held that crediting of the amount (on revaluation of asset) to capital accounts of partners in their profit sharing ratio could be said to be in effect distribution of assets to partners and that since amount credited to capital accounts of partners was available for withdrawal, assets so revalued and credited to capital accounts of respective partners could be said to be ‘transfer’ which would fall in category of ‘otherwise’ and provision of Section 45(4) of the Act would be applicable. (AY.1993-94, 1994-95).
Mansukh Dyeing and Printing Mills v. CIT (2023) 293 Taxman 516/ 334 CTR 4799 (SC) Editorial : Refer CIT v. Mansukh Dyeing and Printing Mills (2022) 449 ITR 439 / 220 DTR 189 / 329 CTR 673 / 145 taxmann.com 151/ / (2023) 290 Taxman 354 (SC)
S. 45(4) : Capital gains-Distribution of capital asset-Transfer-Dissolution of firm-Revaluation of assets and credit to capital accounts of partners-Introduction of new partners-Withdrawal of credit from capital account-Otherwise-Firm is liable to pay capital gains tax- Review petition is dismissed . [S. 2(47)(ii), 47(ii), 50]