Commissioner of Income Tax v. Mansukh Dyeing and Printing Mills

Case snapshot

Sections / provisions: 45(4) of Income-tax Act; 1961

Questions before the Court / Tribunal

• The Commissioner of Income-tax Vs Mansukh Dyeing and Printing Mills (Supreme Court) Date-24th November, 2022 Sub-Whether amount credited on account of revaluation of fixed assets and credited to the partners’ account is liable to be taxed u/s 45(4) of the Income-tax Act,1961. The department has made a major win today in the above case when the Supreme Court held that upon revaluation of fixed asset, the credit which is made to the Partners’ capital account is liable to be taxed u/s 45(4) and approved the decision of the Bombay high Court in the case of CIT Vs A.N.Naik Associates and Ors(2004) 265 ITR 346(Bom).…
• What factual, statutory and procedural conditions control the relief?
• How does the operative order apply to the parties and the challenged proceeding?

Material facts and procedural background

The Commissioner of Income Tax - 23 …Appellant(s)

respect to the same assessee – M/s. Mansukh Dyeing and Printing Mills,

2.1 The respondent assessee, a partnership firm originally consisted

2.5 As per the A.O., the assessee revalued the land and building and

assessee had claimed the depreciation on building, and the Assessing

Appellant / assessee submissions

3. Shri Rupesh Kumar, learned counsel appearing on behalf of the

Revenue has vehemently submitted that in the facts and circumstances

term capital gain. It is vehemently submitted that in the present case as

3.1 It is submitted that the Hon’ble High Court has not properly

Revenue / respondent submissions

“14. Pursuant to the inclusion of sub-section (4) in section 45, on the dissolution of a partnership the profits or gains arising from the transfer of capital asset are chargeable to tax as income of the firm. It is contended on behalf of the assessee that even after introduction of section 45(4), the position will be the same as the definition clause i.e. namely section 2(47) has not been amended. Secondly it is contended that the expression “otherwise” must be read edjusdem generis with the expression dissolution of firm. So considered, there is no dissolution on the firm. So considered, there is no dissolution on the facts of the case. On behalf of the revenue, it was, however, argued that the amendment was brought about to remove the mischief occasioned by

Court / Tribunal analysis and reasoning

partner. It is submitted that in this context, the Bombay High Court held

5. We have heard the learned counsel appearing for the respective

Operative decision and relief

aside and are accordingly quashed and set aside. The order passed by

Present appeals are accordingly allowed. However, in the facts

Ratio and legal principle

• The packaged judgment addresses The Commissioner of Income-tax Vs Mansukh Dyeing and Printing Mills (Supreme Court) Date-24th November, 2022 Sub-Whether amount credited on account of revaluation of fixed assets and credited to the partners’ account is liable to be taxed u/s 45(4) of the Income-tax Act,1961. The department has made a major win today in the above case when the Supreme Court held that upon revaluation of fixed asset, the credit which is made to the Partners’ capital account is liable to be taxed u/s 45(4) and approved the decision of the Bombay high Court in the case of CIT Vs A.N.Naik Associates and Ors(2004) 265 ITR 346(Bom).…. The precise proposition must be read with the Court/Tribunal's reasoning and operative directions.
• Reliance depends on matching the statutory version, jurisdiction, procedural stage and material evidence recorded in the judgment.

Why this judgment matters

This decision is relevant to practitioners and affected parties dealing with the commissioner of income-tax vs mansukh dyeing and printing mills (supreme court) date-24th november, 2022 sub-whether amount credited on account of revaluation of fixed assets and credited to the partners’ account is liable to be taxed u/s 45(4) of the income-tax act,1961. the department has made a major win today in the above case when the supreme court held that upon revaluation of fixed asset, the credit which is made to the partners’ capital account is liable to be taxed u/s 45(4) and approved the decision of the bombay high court in the case of cit vs a.n.naik associates and ors(2004) 265 itr 346(bom).… Its value lies in showing how the adjudicating forum connected the applicable rule to the proved facts and procedural posture.

Practitioner action points

• Match the statutory version, jurisdiction, procedural stage and decisive evidence before relying on the result.
• Verify current appellate, review and SLP history and any later amendment or controlling authority.
• Attach the complete judgment to the working paper or filing and cite the paragraph/page supporting the proposition.

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Section / provision impact

• 45(4) of Income-tax Act - apply the exact version considered in the judgment.
• 1961 - apply the exact version considered in the judgment.

Case network

Similar issue / useful comparison

• JM Financial Ltd. v. Dy. CIT - ITAT Mumbai - F Bench
• Mrs. Usha Eswar v. ITO - Court / Tribunal to be verified
• Adityaraj Builders v. State of Maharashtra - Bombay High Court

Different outcome / possible distinction

• Zainul Abedin Ghaswala v. NFAC - Operative order controls
• ITO v. Rajni D. Saini - Operative order controls

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Source class: SANITIZED_OFFICIAL_PRIMARY_JUDGMENT_COPY · Repository status: PUBLISH_READY