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TMI Blog2016 (10) TMI 554X X X X Extracts X X X X X X X X Extracts X X X X ..... n law and on facts in holding that the amount of Rs. 1,49,35,424/- received by the appellant upon retirement from the firm M/s. Tushar Properties is taxable as Long Term Capital Gain as there was a transfer u/s 2(47) of the ITA, 1961. 2. Alternatively and without prejudice to Ground No. 1; the learned CIT(A)-I, Pune erred in law and on facts in not appreciating that the amount of Rs. 1,90,25,000/- received by the appellant upon retirement from the partnership firm is not taxable at all, being a transaction in capital field & not covered u/s 45(4) of the ITA, 1961. 3. The learned CIT(A)-I, Pune erred in law and on facts in making a wrong distinction of the facts of the case with various binding decisions. He further erred in not providin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wards release of rights in property of the firm, the assessee claimed deduction for indexed cost of acquisition computed at Rs. 54,81,548/-. The benefit of indexation claim on the capital investment in the partnership firm worked out at Rs. 13,91,972/- was not accepted by the Assessing Officer on the ground that capital introduced in the firm is not in the nature of cost of acquisition for rights in property of firm. The assessee has transferred his rights to the profit arising from the firm after the date of retirement. The Assessing Officer observed that as per the deed property was vested in the firm and continued to be an asset belonging to the firm. As per the Assessing Officer, there is no distribution of assets on re-constitution of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t alone at the assessment stage. It was made out before the CIT(A) that amount of Rs. 1,35,43,452/-offered for taxation while filing the return of income was under the erroneous impression of law. It was submitted that although the assessee considered the impugned transaction of receipt from partnership firm towards relinquishment of rights as leading to taxable capital gain while filing the return of income, the aforesaid receipt falls outside the scope of capital gain taxation and therefore cannot be taxed under law. For the proposition that merely because the assessee has wrongfully offered certain receipts as taxable income, the Revenue cannot tax the same unless and otherwise it is taxable in law. The assessee referred to the decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee has received an additional sum of Rs. 1,49,35,424/- in addition to his capital from the partnership firm at the time of retirement on 05th October, 2006. The assessee has initially wrongly offered the aforesaid income to taxation at the time of filing the return of income for claiming deduction towards indexation of cost of acquisition thereon. However, before the CIT(A) it was pointed out on behalf of the assessee that the aforesaid additional sum is not exigible to tax at all. Before us, in order to support his claim about non-taxability of the aforesaid additional sum under head 'capital gains', the Ld. AR relied upon the decision in the case of (i) ITO vs. Shri Rajnish M. Bhandari in ITA No.469/PN/2011, order dated 17.07.2012; (i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s at the time of dissolution or otherwise. It is a mere receipt of surplus over and above the credit balance of capital towards relinquishment of its interest in the capital asset in favour of the incoming partner. He accordingly submitted that no interference with the order of the CIT(A) is called for. 10. We have carefully considered the rival submissions and orders of the authorities below. In the instant case, as noted above, the assessee as a retiring partner has received certain amount over and above the capital balance towards his share in the partnership firm. The partnership firm has continued to exist after the retirement of the assessee partner. The Revenue has treated the additional amount so received from the partnership firm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT vs. Tribhuvandas G. Patel, 115 ITR 95 and that same has been reversed by the Apex Court in Tribhuvandas G. Patel vs. CIT, 236 ITR 151. The Hon'ble Bombay High Court further noted that the decision rendered in the case of Prashant S. Joshi (supra) has also referred to the decision of Tribhuvandas G. Patel (supra) rendered by this Court and its reversal by the Apex Court. The Hon'ble Bombay High Court further noted that the decision of this Court in Prashant S. Joshi (supra) placed reliance upon the decision of the Hon'ble Supreme Court in the case of CIT vs. R. Lingmallu Raghukumar, 247 ITR 801 (SC) wherein it has been held that amounts received on retirement by a partner is not subject to a capital gain tax. 11. In view of the direct de ..... X X X X Extracts X X X X X X X X Extracts X X X X
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