- (1.) THE matter here concerns the transfer of immovable property by a firm to its partners, the controversy being whether such transfer can be effected by mere entries in the books of the firm ?
(2.) THE assessee, Bharati Engineering Corporation, owned three immovable properties described as a building near Paradise Cinema, Phagwara, Plot No. 32, Industrial Area, Phagwara, and a plot near the Octroi Post, Grand Trunk Road, Phagwara. The assessee purported to make over these three properties at their book value to three of its partners, namely, Sarvshri S. R. Uppal, S. P. Uppal and S. K. Uppal, respectively, by debiting their personal accounts with the book value of the properties in question and making corresponding entries in the property account of the firm.
(3.) ACCORDING to the Income-tax Officer, the market value of the three properties in question was much more than their book value and the assessee-firm was consequently called upon to show why capital gains under Section 52 (2) of the Income-tax Act, 1961, be not assessed. After considering the reply of the assessee, the Income-tax Officer held the assessee-firm liable to both long-term and short-term capital gains.;