TMI Blog2016 (7) TMI 699X X X X Extracts X X X X X X X X Extracts X X X X ..... 1(1)(c) of the Act upon the assessee. We do not find any infirmity in the order of the Ld. CIT(A) in deleting the penalty - Decided in favour of assessee - ITA No. 3650/M/2011 - - - Dated:- 13-7-2016 - Shri R. C. Sharma, Accountant Member And Shri Sanjay Garg, Judicial Member For the Assessee : Shri Vipul Joshi, A.R. For the Revenue : Shri Mallikarjun Utture, D. R. ORDER Per Sanjay Garg, Judicial Member The present appeal has been preferred by the Revenue against the order dated 18.02.2011 of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] relevant to assessment year 2003-04. 2. The Revenue is aggrieved by the action of the Ld. CIT(A) in deleting the penalty levied by the Assessi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich was higher as compared to the cost price. The AO, taxed the entire value of Goodwill of ₹ 68,79,284/- as STCG u/s 45(4) by relying on the decision of the Hon'ble Mumbai High Court in the case of M/s. AN. Naik Associates (265 ITR 346). 4. During the course of appellate proceedings, the assessee contended that there was no dissolution of firm and thereby sec 45(4) was not applicable. It was further contended that assessee transferred various assets and liabilities including the stock in trade and if the value of stock in trade is excluded from the net assets transferred, the balance was negative and, therefore, even if case of retirement of partner is covered u/s 45(4), there was no liability u/s Section 45(4) in its case. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red must be a capital asset as defined u/s 2(14). Further it was contended that stock in trade was specifically excluded from the definition of capital asset u/s 2(14)(i). It was contended that the assessee did not hide any facts before the A.O. during the course of assessment proceedings and merely because there was difference of opinion regarding the liability to capital gain, concealment penalty could not be levied, The assessee relied on various decisions also. However, the A.O, did not accept the reply of the assessee on the ground that the assessee himself contended before the Ld. CIT(A) that the STCG arising out of distribution of capital assets should be restricted to ₹ 34,39,642/-. He held that the difference of opinion was r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the material facts and only did not offer capital gain u/s 45 (4) on the bonafide belief that there was no liability to capital gain as there was only retirement and further that there was no transfer of capital asset as defined u/s 2(14). The A.O. in the impugned order has heavily relied on the content ion of the appellant before the CIT(A) that only ₹ 34,39,642/- was liable to capital gains. The A.O. conveniently ignored and overlooked the fact that the above admission was only alternatively submission without prejudice to the claim of the appellant that there was no liability to capital gain. Merely based on the alternative claim of the appellant, the AO would not be justified in imposing penalty stating that the admission before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arned counsel for the assessee to the effect that value of stock-in-trade has to be excluded while determining capital gain because what is transferred on retirement of a partner from the firm is the share or interest of a partner in the partnership and is assets and not the individual items of properties of the firm which is allotted on retirement to the retiring partner. For the aforesaid reasons, we confirm the order of CIT(A) and dismiss ground No.1(a)(d) raised by the assessee. From the above observation, it is seen that though the Hon'ble ITAT has upheld the CIT(A)'s order, the reasoning given are entirely different from the reasons given by the CIT(A). Thus from the above, it is seen that the appellant disclosed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the records. The Ld. A.R. of the assessee, before us, has submitted that the assessee neither had filed any inaccurate particulars of income nor had concealed its income. The assessee was under bonafide belief that there was no liability to capital gains tax. The assessee had formed this view in the light of the decision of the Jabalpur Bench of the Tribunal in the case of ACIT vs. Thermoflics India Ltd. (supra). He has further submitted that the assessee was of the view that even if section 45(4) was applicable to distribution of capital assets on retirement, the value of stock in trade was to be excluded from the value of net assets transferred to the retiring partners. He has further submitted that if so done, the result would be a n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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