He had also 82 ordinary shares of Karamchand Premchand Private Limited purchased at Rs.
45,262.50.
235 of 1980.
m e partnership was companystituted under an agreement dated February 25, 1973.
45,262.50.
1777 of 1981.
442 and that of a share of Karamchand Premchand Private Limited was Rs.
1777 of 1981, the appellant was a partner in a registered partnership firm, Messrs. Rajka, or which the other partner was his wife.
From the Judgment and Order dated 30.4.1981, 1/4.5.1981 of the Gujarat High Court in Income Tax Reference No.
From the Judgment and Order dated 30.4.1981, 4.5.1981 of the Gujarat High Court in Income Tax Reference No.
1,60,279, but on the date when he companytributed those shares to the partnership firm he revalued the shares at the market value of Rs.
S. Desai, S.P. Mehta and Mrs. A.K. Verma for the Appellant in C.A. No.
1,49,819 and debited the resulting difference of Rs.
An offer was made by the companypany to her by which she was entitled to apply for an equal number of new ordinary shares at a premium with an option of either taking the shares or renouncing them in favour of others.
S. Desai, J.P. Shah, P.H. Parekh and Gautam Phliph for the Appellant in C.A. No.
The assessee appealed to the Appellate Assistant Commissioner of Income Tax, but the appeal was dismissed.
1841 of 1981.
The appellant renounced her rights to all the shares and realised Rs.
1777 of 1981.
In the alternative she claimed that the right to receive the new shares was a right which was embedded in her old shares and companysequently when she realised the sum of Rs.
1841 of 1981.
10,460 to his capital account.
9,000 in cash to the share capital of the firm and his wife would companytribute Rs.
1,49,819 and the market value of the shares being Rs.
The Commissioner of Income Tax, however, being of opinion that the difference between the market value of the shares and the companyt of acquisition of the shares to the assessee should have been brought to tax as capital gains in view of s. 45 of the Income Tax Act, 1961, exercised his revisional jurisdiction, and reopening the assessment he remanded the case to the Income Tax Officer directing him to revise the assessment after companyputing the capital gains arising out of the transfer.
The partnership deed recited that the partnership business had companymenced on January 1, 1973, that it was a partnership at will and further provided that the assessee would initially companytribute Rs.
CIVIL APPELLATE JURISDICTION Civil Appeal No.
1,000 in cash.
A. Ramachandran, Mrs. J. Ramachandran, H.K. Kaji and C. Patel for the Intervener in C.A. No.
K. Vanerjee, Additional Solicitor General, S.T. Desai, P.A. Francis, and Miss A. Subhashini for the Respondent in C.A. No.
Subsequently the Appellate Tribunal referred the case to the High Court of Gujarat for its opinion on the following questions of law 1 Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in holding that numbercapital gains resulted from the transfer of the shares held by the assessee to the partnership firm as his capital companytribution, the companyt of acquisition of the shares to the assessee being Rs.
1841 of 1981, the facts are as follows.
In the circumstances, the Appellate Tribunal did number go into the question whether the transfer was without companysideration.
In Civil Appeal No.
P. Shah and P.H. Parekh for the Intervener in C.A. No.
T. Desai, and Miss A. Subhashini for the Respondent in C.A. No.
The assessee appealed to the Income Tax Appellate Tribunal, and the Appellate Tribunal held that while the transaction did amount to a transfer within the meaning of sub s. 47 of s.2 of the Income Tax Act it did number result in capital gains liable to tax.
In second appeal, however, the Income Tax Appellate Tribunal took the view that there was numbertransfer of a capital asset within the meaning of s.45 read with sub s. 47 of s.2 of the Income Tax Act and companysequently he deleted the item from the assessment.
1777 of 1981.
AND Civil Appeal No.
25,666.
It was provided that when any addition to the capital was required for the purposes of the partnership, the partners would companytribute such additional capital from time to time.
As his companytribution to the capital of the partnership firm the assessee made over certain shares of limited companypanies which were held by him as his capital assets.
The appellant, who is the assessee, was a partner in Messrs. Suvas Trading Company, a partnership firm companystituted under a deed of partnership dated September 27, 1973.
Whether, on the facts and in the Circumstances of the case, the Tribunal was right in law in holding that there was a transfer within the meaning of sub s. 47 of s.2 of the Income Tax Act, 1961 of the shares companytributed by the assessee as capital to the partnership firm in which he was a partner?
The Income Tax Officer, when drawing up the assessment order for the assessment year 1974 75 in respect of the assessee, did number include the difference in the assessable income.
1,60,279?
1,81,106 on March 22, 1973 the market value of a share of the Ahmedabad Manufacturing and Calico Printing Company Limited was Rs.
It was further provided that if any asset was brought in by a partner as capital companytribution the account of such partner would be credited with the fair market value on the date the asset was brought in.
In Miss Dhun Dadabhoy Kapadia Commissioner of Income Tax, Bombay, 1967 63 I.T.R 651, the appellant held by way of investment some ordinary shares in a limited companypany.
When this amount was sought to be wholly taxed as a capital gain the appellant claimed that on the issue of the new shares the value of her old shares depreciated and that as a result of the depreciation she suffered a capital loss in the old shares which she was entitled to set off against the capital gain of Rs.
The Commissioner of Income Tax obtained a reference to the High Court of Gujarat on the following questions of law Whether, on the facts and in the circumstances of E the case, the Appellate Tribunal was right in law in holding that the companytribution in the form of shares of the value of Rs.
The book value of those shares in his account books was shown as Rs.
1841 of 1981.
u 1841 of 1981.
The Judgment of the Court was delivered by PATHAK, J. This and the companynected appeal, filed by certificate granted by the High Court, raise the interesting question whether the capital companytribution by a partner to the assets of a partnership firm at an appreciated value can be said to give rise to a capital gain in his hands liable to income tax.
1,55,440.
1777 of 1981.
The Appellate Tribunal allowed the appeal and set aside the order of the Income Tax Officer.
In Civil Appeal No.
The assessee had in his possession 80 ordinary shares of the Ahmedabad Manufacturing and Calico Printing Company Limited which had been purchased at Rs.
34 of 1980.
The total companyt was Rs.
