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2018 (4) TMI 1640 - ITAT MUMBAIReopening of assessment - assessee has received an arbitration award upon relinquishment of her rights in the partnership - Held that:- Undoubtedly there is a live link between the information received and the escapement of income. Such reopening of assessment also cannot be said to be on account of change of opinion as the return of income and assessee was processed only u/s. 143(1) wherein the issue of taxability of arbitration award was not considered. A mention in the fine prints can by no stretch of imagination be considered sufficient information given in the original return. Hence, there can be no question of change of opinion, when no option on the issue was formed in the first place. In our considered opinion, CIT (Appeals) has passed a reasonable order by appreciating the facts and law in this regard. Thus we are of the considered opinion that the ld. Commissioner of Income Tax (Appeals) has passed a reasonable order upholding the validity of the reopening. Hence, we do not find any infirmity in the same. Hence, the assessee’s challenge to the reopening fails. On merits of case when the arbitration award was given in consideration of the assessee giving certain rights and interests in assets which included rights and interests in assets which have not even a remote connection with her interest in the firm or the assets of the firm, the Arbitration Award cannot be said to be given on account of her retirement from the firm. As rightly observed by the authorities below, the accepted practices upon retirement from the firm is that the share in the partnership ship is worked out by drawing of accounts in the manner prescribed by the relevant provision of the partnership law. His/her share in net partnership asset after deduction of liabilities and prior charges is determined and the same is given to him. In the present case, no such determination regarding the share of the assessee in the partnership firm has been done. The assessee despite request made in this regard by the AO has not been able to provide the working of the share in the net asset of the firm and has generally stated that it was based on the market value of the asset of the firm. Before the CIT (Appeals) also no detail working has been given except for submitting the valuation report of the assets by way of additional evidence. It is clear that neither the Arbitration award nor the concerned terms made any mention or a declaration or a decision for a finding that the assessee retired from the firm in the year 1997. Neither does the Arbitration Award or Consent Terms anywhere specify that the sum of ₹ 28 crores represents the payment to the assessee for her retirement from P.N.Writer & Co. As a matter of fact, the basis of the Arbitration Award was never given. As rightly observed by the CIT(Appeals) that the retirement of a partner from the firm has to be an evident fact and is not required to be indirectly inferred or to be guessed in substance. The assessee has received a consideration in lieu of a composite bundle of conditions which included giving up her rights and interests in assets which have no connection with her interest in the firm or its assets and also for withdrawal of all suits/legal proceedings filed by her against the other persons and against firms and entities owned or controlled by them. Hence, we agree with the CIT (Appeals) that it is judicially settled that the special income must be considered in its wider sense. The definition of income is an inclusive one having a wide amplitude. Section 56(1) provides that income of every kind which is not to be excluded from the total income in this Act shall be chargeable to tax income under the head ‘income from other sources’ if it is not chargeable to income tax under any of the head as specified in section 14. Except for making the claim, no detail has been furnished whatsoever by the assessee as to how the receipt from the arbitration award amount to a family settlement. There is no mention whatsoever in the arbitration award as to how the said amount has been determined or that it is a family arrangement. In the absence of any detail thereof, the amount received cannot be held to be a receipt on account of family arrangements. Accordingly, no infirmity in the order of the ld. Commissioner of Income Tax (Appeals). Accordingly, we uphold the same. - decided against assessee.
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