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2014 (11) TMI 606 - HC - Income TaxEffect of amendment u/s 55(2) – treatment of amount included in total income on goodwill received on retirement – capital gains tax or not – Held that:- The AO found that the assessee was entitled to receive an amount of ₹ 67,50,000/- from M/s. Jyoti Estate out of which the assessee had already received ₹ 28,00,000/- on 24.6.1989 and the balance was to be paid to him by 24.2.1990 - the assessee also contended that the amount received from the two firms was capital receipts which was exempt from income-tax - The Tribunal rightly considered CIT VS. MOHANBHAI PAMABHAI [1971 (9) TMI 56 - GUJARAT High Court] wherein it has been held that the interest of a partner in a partnership is not interest in any specific item of the partnership property - It is a right to obtain his share of profits from time to time during the subsistence of the partnership and on dissolution of the partnership or on his retirement from the partnership to get the value of his share in the net partnership assets which remain after satisfying the debts and liabilities of the partnership. When a partner retires from a partnership and the amount of his share in the net partnership assets after deduction of liabilities and prior charges is determined on taking accounts on the footing of notional sale of the partnership assets and given to him, what he receives is his share in the partnership and not any consideration for transfer of his interest in the partnership to the continuing partners - His share in the partnership is worked out by taking accounts in the manner prescribed by the relevant provisions of the partnership law and it is this, namely, his share in the partnership which he receives in terms of money - There is in this transaction no element of transfer of interest in the partnership assets by the retiring partner to the continuing partners – the order of the Tribunal is upheld – Decided against revenue.
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