TMI Blog2014 (12) TMI 1175X X X X Extracts X X X X X X X X Extracts X X X X ..... the partnership asset by the retiring partner. Therefore, considering the totality of facts and the circumstances by applying the ratio laid down by Hon’ble jurisdictional High Court in the case of Riyaz A. Shekh [2013 (12) TMI 248 - BOMBAY HIGH COURT] wherein held Amounts received on retirement by a partner is not subject to capital gains tax - Decided against Revenue Deduction u/s 54 - Held that:- As there is uncontroverted finding in the impugned order that all the payments to the contractors were by cheque only, thus as per the provisions of section 54(2) of the Act, the assessee was to invest the capital gains as per the provision of the Act, we find no infirmity in granting deduction u/s 54 to the extent mention in the order thus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /Mum/2009) order dated 11/02/2011. On the other hand, the ld. CIT-DR, Shri A.K. Atri, strongly defended the conclusion arrived at in the impugned order by contending that the case of N.A. Mody vs CIT (1986) 162 ITR 420 is squarely applicable to the facts of this case. The impugned order was defended. 2.1. We have considered the rival submissions and perused the material available on record. The facts, in brief, are that the assessee is a Hindu Undivided Family (HUF) declared income of ₹ 24,46,236/- in its return filed on 29/07/2009. The assessee was a partner in the firm namely Landmark Development since 16/09/1993. The assessee retired from the firm with effect from 14/08/2008, as per retirement deed, dated 14/08/2008. As per the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... az A. Shekh (supra) has dealt with the issue after considering the cases relied before us and decided in favour of the assessee. It is pertinent to mention here that this decision of Pune Bench was affirmed by Hon ble jurisdictional High Court. Thus, for ready reference, we are reproducing hereunder the relevant portion from the order dated 29th October 2010 of the Pune Bench: we have carefully considered the rival submissions and perused the orders of the authorities below. As noted earlier, the short point involved in this appeal relates to taxability of amount received by the assessee on retirement from partnership firm. The Hon ble Supreme Court in the case of Mohanbhai Pamabhai (supra) following its judgment in the case of Sunil Si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (supra) to decide the controversy against the assessee, cannot be upheld. Infact, the judgment of the Hon ble Bombay High Court in the case of Prashant S. Joshi (supra) has also noted the omission of section 47(ii) of the Act and insertion of section 45(4) of the act with effect from 01.04.1988. Considering the entirety of the legal position, it has been affirmed by the Hon ble High court that amounts received by the partner on his retirement, are exempt from capital gains tax. In this view of the matter, we find it appropriate to allow the claim of the assessee and accordingly the order of the CIT(A) is set aside. The Assessing Officer is directed to delete the impugned addition. Thus, in Ground nos. 2 3, assessee succeeds as above. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the matter of Prashant S. Joshi (supra) has also referred to the decision of Tribuvandas G. Patel (supra) rendered by this Court and its reversal by the Apex Court. Moreover, the decision of this Court in the case of Prashant S. Joshi (supra). Placed reliance upon the decision of the Supreme Court in the case of CIT v/s R. Lingamallu Rajkumar (2001) 247 ITR 801/(2002) 124 Taxman 127 wherein it has been held that amounts received on retirement by a partner is not subject to capital gains tax. In the above circumstances, we see no reason to entertain the proposed question of law. 2.5. In the light of the above, more specifically, when the issue has been settled by the Hon ble jurisdictional High Court, we find merit in the appeal of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held that when a partner retires from a partnership taking his share of partnership interest, there is no element of transfer of interest in the partnership asset by the retiring partner. Therefore, considering the totality of facts and the circumstances by applying the ratio laid down by Hon ble jurisdictional High Court in the case of Riyaz A. Shekh, which is binding on us, we reverse the order of the ld. Commissioner of Income tax (Appeals). Thus, appeal of the assesses is allowed. 2.7. So far as, the appeal of the Revenue (ITA No. 5588/Mum/2012) is concerned, directing the Assessing Officer to give proportionate deduction u/s 54F of the Act in respect of amount of ₹ 4,87,13,222/-, invested in construction of house up to 31/03/ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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