Law:

Section:

Word 'otherwise' used in section 45(4) takes into its sweep not only cases of dissolution but also cases of subsisting partners of a partnership, transferring assets in favour of a retiring partner Section 45, read with sections 2(14) and 2(47), of the Income-tax Act, 1961 - Capital gains - Chargeable as - Assessment year 1997-98 - Whether word 'otherwise' used in section 45(4) takes into its sweep not only cases of dissolution but also cases of subsisting partners of a partnership, transferring assets in favour of a retiring partner - Held, yes - By memorandum of family settlement, dated 30-1-1997, it was agreed between parties thereto that business of six firms as set out therein would be distributed in terms of family settlement as parties desired that various matters concerning business and assets thereto be divided separately and partitioned - Pursuant to said family settlement, there was a deed of reconstitution of various partnerships as set out in family settlement - Assessing authority assessed partnerships for capital gains under section 45(4) - Tribunal held that business continued to be run and there was no dissolution of firm and, consequently, section 45(4) was not attracted - Whether, Assessing Officer was justified in assessing partnerships for capital gains under section 45(4) - Held, yes FACTS By the memorandum of family settlement, dated 30-1-1997, it was agreed between the parties thereto, that the business of six firms as set out therein would be distributed in terms of the family settlement as the parties desired that various matters concerning the business and assets thereto be divided separately and partitioned. Under the terms and conditions of the settlement, it was set out that the assets which were proposed to be divided in partition under the settlement were held by the aforesaid firms and individual partners. With reference to the firms, the manner in which the firms were to be reconstituted by retirement and admission of new partners was also set out. It also provided that such of those assets or liabilities belonging to or due from any of the firms allotted to parties thereto in the schedule, would be transferred or assigned…

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