SUKHARAJ B NAHAR (HUF),MUMBAI vs. DCIT (OSD) 1 CEN CIR 7, MUMBAI

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ITA 5706/MUM/2014Status: DisposedITAT Mumbai24 September 2018AY 2006-074 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the amount received by the assessee was the final capital balance from a dissolved firm, not income. As per Section 45(4), tax liability on dissolution of a firm accrues to the firm, not the partner.

What were the facts?

The assessee, an HUF, received an amount of Rs. 19,90,675/- as a final capital balance after the dissolution of a partnership firm in which it was a 50% partner. The Assessing Officer treated this amount as income and made an addition under Section 68.

What were the issues?

Whether the final capital balance received by a partner upon dissolution of a firm is taxable as income in the hands of the partner under Section 68.

Which sections of the Income-tax Act were involved?

Section 68,Section 45(4)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “E”, BENCH MUMBAI

Before: SHRI R.C.SHARMA, AM & SHRI SANDEEP GOSAIN, JM Shri Sukharaj B Nahar (HUF)

For Appellant: Shri Vimal Punamiya
For Respondent: Shri R. Manjunatha Swamy
Hearing: 26/07/2018Pronounced: 24/09/2018

आदेश / O R D E R PER R.C.SHARMA (A.M):

1.

This is an appeal filed by the assessee against the order of CIT(A)- 40, Mumbai dated 30/06/2014 for A.Y.2006-07 in the matter of order passed u/s.143(3) r.w.s. 153C of the IT Act.

2.

Only grievance of assessee relates to CIT(A)’s action in confirming the addition of Rs.19,90,675/- made by the AO, being the final debit and credits in the books of the firm M/s. Noble Constructions which have been transferred to the capital account on dissolution of the said firm, without any proper and justifiable basis.

Shri Sukhraj B Nahar 3. Rival contentions have been heard and record perused. The assessee is an HUF and has income from business and income from other sources. During the year assessee has credited following amounts in his capital account. a. S D Mehta (Due to death) Rs.2,38,192/- b. Suresh Kumar Vanigota Rs.1,97,206/- c. Brijesh Enterprises Rs.68,04,500/- d. Noble Construction (50%) Rs.2,01,580/- e. Noble Construction Rs.19,90,675/- Total Rs.94,32,153/-

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