1973 (6) TMI 5 - HC - Income Tax

Amount received by partner during dissolution of the firm in excess of capital invested - Whether on the facts and in the circumstances of the case the Appellate Tribunal is correct in law in holding that the capital gains derived by the assessee on relinquishment of his share in Malabar Fisheries Co. is exempt under section 47(ii) of the Income-tax Act 1961 ? - question that has been referred to us must therefore be answered in the affirmative i.e. in favour of the assessee and against the revenue

Summary

The High Court of Kerala ruled that capital gains from the relinquishment of a share in a firm are exempt under section 47(ii) of the Income-tax Act. The court held that the distribution of money in lieu of capital assets on the dissolution of a firm qualifies as a distribution of capital assets. The decision favored the assessee, who was awarded costs.