The Karnataka High Court in the case of CIT vs. P. N. Panjawani, reported in 208
Taxman 22, held that, there is no provision in the Act for levying capital gains tax
on consideration received by a partner for reduction of his share in partnership
firm on inclusion of new partners. In the said case on reconstitution of firm, new
partners were inducted, who contributed cash as their capital contribution and
erstwhile partners withdrew money brought in by incoming partners as drawings.
However, they continued to be the partners of the firm. Only their share got
reduced by almost 50%.
Taxman 22, held that, there is no provision in the Act for levying capital gains tax
on consideration received by a partner for reduction of his share in partnership
firm on inclusion of new partners. In the said case on reconstitution of firm, new
partners were inducted, who contributed cash as their capital contribution and
erstwhile partners withdrew money brought in by incoming partners as drawings.
However, they continued to be the partners of the firm. Only their share got
reduced by almost 50%.
No comments:
Post a Comment