TMI Blog2017 (1) TMI 1731X X X X Extracts X X X X X X X X Extracts X X X X ..... nd allow the appeal of the assessee. - ITA No. 3609/Mum/2013 - - - Dated:- 5-1-2017 - SRI MAHAVIR SINGH, JM AND SRI N.K. PRADHAN, AM For the Appellant : Shri. K.Gopal, AR For the Respondent : Shri. M.V. Rajguru, DR ORDER PER MAHAVIR SINGH, JM: This appeal by the assessee is arising out of the order of CIT (A)-30, Mumbai, in appeal No. CIT(A)-30/ITO-19(3)(2)/IT-314/11-12 dated 19-02-2013. The Assessment was framed by ITO Ward-19(3)(2), Mumbai for the A.Y. 2004-05 vide order dated 01-12-2011 u/s 144 r. w. s. 147 of the Income Tax Act, 1961 (hereinafter the Act ). 2. At the outset, the learned Counsel for the assessee stated that he has not interested in prosecuting the ground No.1, regarding ex-parte assessment u/s 144 of the Act and another addition of ₹ 5,00,000/- added u/s 68 of the Act vide ground no. 2. Following are ground Nos. 1 2: - 1. On the facts and in the circumstance of the case and in law, the learned CIT(A) has erred in upholding the assessment order passed u/s 144 of the I.T. Act, which is invalid and bad in law. 2. On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in upholding th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee and his family members relinquish their share and interest in the partnership firm and the property of the firm in favor of the continuing partners. iii. In lieu of the above transfer, consideration to the tune of ₹ 36,42,860/- was received by Shri. Kaushalya Sampat which is as under:- According to AO, this income was not disclosed and hence, he reopened the assessment by issuing notice u/s 148 of the Act, for the reason that there is a escapement of income qua this receipt and finally he added the same to the return of income of the assessee by observing in Para 7.2 as under: - In regard to receipt of ₹ 36,42,860/- as discussed in Para 4 and 4.5 above, the assessee has not declared the investment made in the firm Deccan Enterprises at Bangalore at any time when the investment was made. The assessee has also not declared the transaction and the income derived by her in the return of income field on 31-10-2004. In view of the discussions made above and that the assessee has not submitted any details, the total receipts of ₹ 36,42,860/- is treated as income from undisclosed sources u/s 68 of the IT Act and added to the total income of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inst all costs and liability incurred by such use. In view of the above, we are of the view that this is a clear cut case of assessee receiving a sum of money on retirement from the firm. Whether, such sum receipt on retirement is taxable or not is answered by Hon ble Bombay High Court in the case of CIT Vs. Riyaz A. Sheikh (2014) 41 taxman.com 455 (Bom), wherein considering the judgment of Hon ble Bombay High Court in the case of Prashant S. Joshi v. ITO (2010) 324 ITR 154 (Bom) has held as under:- 3. In the impugned order, the Tribunal does refer to the decision of this Court in the matter of N.A. Mody (supra) and states that it follows the decision of this Court in the matter of CIT V/s. Tribhuvandas G. Patel reported in 115 ITR 95 and the same has been reversed by the Apex Court in Tribhuvandas G. Patel V/s. CIT reported in 263 ITR 515. This Court in 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd ambit two kinds of transactions which would not ordinarily constitute transfer in the accepted connotation of that word, namely, relinquishment of the capital asset and extinguishment of any rights in it. But even in this artificially extended sense, there is no transfer of interest in the partnership assets involved when a partner retires from the partnership. 14. The Gujarat High Court held that there is, in such a situation, no transfer of interest in the assets of the partnership within the meaning of section 2(47).When a partner retires from a partnership, what the partner receives is his share in the partnership which is worked out by taking accounts and this does not amount to a consideration for the transfer of his interest to the continuing partners. The rationale for this is explained as follows in the judgment of the Gujarat High Court (Page No.405) :- ... What the retiring partner is entitled to get is not merely a share in the partnership assets; he has also to bear his share of the debts and liabilities and it is only his share in the net partnership assets after satisfying the debts and liabilities that he is entitled to get on retirement. The debts and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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