DY COMMISSIONER OF INCOME TAX, GULTEKDI, PUNE vs. JAIRAJ REALTY UNIT 9LLP, PUNE

ITA 713/PUN/2026Status: DisposedITAT Pune29 September 2026AY 2019-2058 pages
AI SummaryDismissed

What were the facts?

The Revenue appealed the CIT(A)'s order dated 23.12.2025 for AY 2019-20. The assessee, Jairaj Realty Unit 9 LLP, engaged in construction and sale, initially filed a NIL income return, accepted under Section 143(1). A search under Section 132 in the Nyati Group led to a survey under Section 133A at the assessee's premises on 14.12.2022. Incriminating documents suggesting escaped income prompted a notice under Section 148A(b) on 08.01.2024. The AO issued a Section 148 notice on 30.03.2024 after the assessee failed to respond. The assessee filed a NIL income return under Section 148 on 29.06.2024. During assessment, the AO noted a significant increase in partner's capital from FY 2017-18 to FY 2018-19, correlating with an increase in fixed assets. The AO observed that an amount credited to retiring partners' capital accounts matched the increase in fixed assets, suggesting revaluation of assets and potential capital gains under Section 45(4).

What did the Tribunal hold?

The Tribunal upheld the CIT(A)'s order deleting the addition. The Tribunal found no infirmity in the CIT(A)'s reasoning. While the judgment excerpt provided does not detail the specific reasoning for each issue, it refers to the detailed reasoning of the Ld. CIT(A) in deleting the addition. The Tribunal dismissed the grounds raised by the Revenue. The operative direction was to uphold the deletion of the addition made by the Assessing Officer. The specific amount in dispute, Rs. 1,44,86,70,158/-, was effectively not taxed in the hands of the assessee as per the CIT(A)'s order, which was affirmed by the Tribunal. No issue was expressly left undecided.

What were the issues?

1. Whether the increase in partner's capital, corresponding to the increase in fixed assets, arising from the retirement of partners, is taxable as capital gains under Section 45(4) of the Income Tax Act, 1961. The assessee argued that there was no revaluation of assets and no revaluation reserve was created, thus Section 45(4) was inapplicable. The Revenue contended that the increase in fixed assets and the corresponding credit to retiring partners' capital accounts squarely fell under Section 45(4). 2. Whether the credit of Rs. 1,44,86,70,158/- in the retiring partners' accounts should be taxed in the hands of the assessee under Section 68 of the Act. The assessee maintained that the provisions of Section 45(4) were not applicable, implying Section 68 would also not be triggered by the same transaction. The Revenue sought to tax this amount under Section 68, in addition to Section 45(4).

Which sections of the Income-tax Act were involved?

Section 139(1),Section 143(1),Section 132,Section 133A,Section 148A(b),Section 148,Section 143(2),Section 142(1),Section 45(4),Section 68

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, PUNE BENCH “A”, PUNE

Before: SHRI R. K. PANDA & SHRI VINAY BHAMORE

For Appellant: Shri Sanjay N Kapadia
For Respondent: Shri Mithun Shete, CIT-DR

PER R. K. PANDA, VP :

This appeal filed by the Revenue is directed against the order dated 23.12.2025 of the Ld. CIT(A), Pune-12 relating to assessment year 2019-20. 2. Facts of the case, in brief, are that the assessee is a limited liability partnership engaged in the business of construction and sale of commercial units. It filed its return of income u/s 139(1) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) on 31.08.2019 declaring total income at Nil. The return filed by the assessee was processed u/s 143(1) of the Act on 19.02.2020 by accepting the returned income.

2

3.

A search and seizure action u/s 132 of the Act was conducted in the case of Nyati Gr

The order continues below.

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