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2024 (4) TMI 605 - TELANGANA HIGH COURTCharacterization of receipt - amount received by the appellant upon retirement from the partnership - taxability as capital gains under the Income Tax or not? - department, was of the firm stand that the right of the appellant in the partnership firm is a capital asset and the extinguishment of the right in the said firm is in fact a transfer of the receipt against capital asset - Appellant as contended that receipt of the share value of goodwill cannot be subjected to capital gains tax as there was no transfer of goodwill to the firm by the appellant - Whether the Income Tax Appellate Tribunal was correct in law in holding that the receipt of the share in value of goodwill by the appellant is taxable as capital gains under the Act ? HELD THAT:- Coming to the impugned order passed by the Tribunal in SMT. GIRIJA REDDY, P HYDERABAD [2012 (7) TMI 652 - ITAT HYDERABAD] would give a clear indication that the principles laid down by the Division Bench of this High Court in Chalasani Venkateswara Rao [2012 (9) TMI 12 - ANDHRA PRADESH HIGH COURT] has been accepted by the Tribunal while making the aforesaid observations. However, while concluding, the Tribunal took a different view altogether which, therefore, would not be in the opinion of this Bench, proper, legal and justified. Therefore, the respondent-Department cannot tax the amount received by the appellant upon retirement from the partnership as capital gains as there is no specific transfer of a capital asset affected when the appellant had retired from the partnership firm. So also, the finding of the Tribunal holding that the receipt of share in value of goodwill by the appellant is taxable as capital gains is not proper. Therefore, the impugned order passed by the Tribunal is unsustainable and the same deserves to be and is accordingly dismissed. Assessee appeal stands allowed.
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