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2014 (1) TMI 1739 - ITAT CHENNAIAdditional payments made to the retiring partners - addition on capital gain - existence of element of profit - Held that:- The character of additional amounts paid to the retiring partners represent the share of the retiring partners in the Worth and Value of the business in which they were partners. The Worth and Value included the standing of the business, the goodwill and so many other intangible virtues. So, what is paid to the retiring partners is their rightful shares in that Worth and Value of the firms and plainly speaking, there is no such additional payments as alleged by the Revenue towards profits. What is paid to the retiring partners are those amounts due to them. The only thing is that their shares in Worth and Value of business have been separately computed. Therefore, we find that the additional payments made to the retiring partners were not in the nature of any profit or income within the meaning of Section 28(va). As nontaxable capital receipts and in that way, the Commissioner of Income Tax (Appeals) is right in holding that the amounts are not taxable - Decided against revenue
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