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2012 (10) TMI 523 - AT - Income TaxIncome from surrender of tenancy rights - Tenancy rights vested with the firm or with the partners - The partners on receipt of their shares in surrender of tenancy rights, invested the same in NABARD Bonds. - Held that:- if there was a partnership firm, then under all circumstances, it is the firm which shall be taxed and not the partners, as not only Partnership is a separate legislation but in the Income Tax Act, it is a distinct entity in section 2(23) and 2(31)(iv). It is the persons, legal heirs, who have continued to hold the tenancy rights and have used the name of the business only for the sake of convenience, which had been continuance from the pre partition days. Moreover, none of the partners, at no point of time have ever introduced his/her share in the tenancy as capital in the accounts of the firm. The individuals were, thus correct, who had not only taken the compensation for surrender of tenancy rights and deposited the same in NABARD Bonds - Deletion of addition made by CIT(A) at Rs. 2,50,00,000/- as long term capital gain on account of compensation received from M/s. Veera &. Gala Developers on surrender of tenancy rights is right - order of the CIT(A)is sustained - Decided in favor of assessee.
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