TMI Blog2018 (8) TMI 1926X X X X Extracts X X X X X X X X Extracts X X X X ..... Hence, the sum received by the assessee is clearly pursuant to the retirement of the assessee from the firm which cannot be taxed as capital gain. The agreement of acquisition of the development right was also in the name of the firm M/s. Vicky Developers and not in the name of the assessee. Hence, the Assessing Officer s reference that the same was received by the assessee pursuant to his relinquishment of his right in the development right is not sustainable, as the assessee has no individual right in the said agreement. Hon'ble Bombay High Court in the case of CIT vs. Riyaz A. Sheikh [ 2013 (12) TMI 248 - BOMBAY HIGH COURT] supports the case of the assessee. In this case, it was held that the amount received by an erstwhile partner on his retirement from partnership firm arising on transfer of goodwill is not liable to be taxed as long term capital gain. Similar view was expounded by the Hon ble Apex Court in the case of CIT vs. R. Lingmallu Raghukar [ 1997 (1) TMI 74 - SUPREME COURT] . In this case it was held that excess amount received by assessee on retirement from partnership firm was not assessable to capital gains as there was no transfer of any assets as contemp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me Tax (Appeals) deleted the protective addition for assessment year 2008-09 also. In this background, we refer to the facts in the present case which reads as under: The facts leading to the addition are that the appellant was a partner with Mrs. Vandana Suresh Punwani in a partnership firm known as M/s. Vinky Developers since 22.10.1988 with profit sharing ratio of 50:50. The partnership firm was not registered. The firm had acquired development right in a plot owned by St. Peter's Church, Hill Road, Bandra, Mumbai in the year 1989 for ₹ 20,00,000/-. Subsequently, there was dispute between two partners and matter was referred to sole arbitrator, Justice Dr. B.P. Saraf, retired Chief Justice of J K. The arbitration consent was awarded on 09.08.2007. The assessee retired from the partnership firm and in lieu of his retirement, he got ₹ 3.33 crores in post-dated cheques. Since the cneques were not honoured, the appellant moved to the Hon'ble Bombay High Court. The Hon'ble Bombay High Court vide its order dated 07.08.2008 directed the other partner, Mrs. V. S. Punwani to pay ₹ 2.95 crores. Against the above background, the AO asked the assessee as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ings between the partners and subsequently by the Hon'ble Bombay High Court. The ld. Commissioner of Income Tax (Appeals) gave a finding that he has perused the copies of partnership deed and agreement for the development right in respect of the plot between the Vinky Developers and St. Peter s Church, order of the arbitration award and the order of the Hon'ble Bombay High Court. The ld. Commissioner of Income Tax (Appeals) observed that from the perusal of the above, it was clear that there was a valid partnership deed between Mrs. V. S. Pulwani and Mr. R. P. Advani (assessee). That the partnership has a profit sharing ratio of 50:50. That duration of partnership was AT WILL . That the agreement of acquisition of development right was also in the name of the firm M/s. Vinky Developers and not in the name of the assessee. In the arbitration award also reference to the partnership firm Vinky Developers was made. After the payment of sum involved which Mrs. Punwani would be the sole property of M/s. Vinky Developers was also mentioned in the award. In these circumstances, the ld. Commissioner of Income Tax (Appeals) held that the partnership firm cannot be doubted and the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the ld. Commissioner of Income Tax (Appeals). In this connection, the ld. Counsel of the assessee s submissions inter alia reads as under: In present case, the following relevant facts exists which confirm the existence of the partnership firm M/s Vinky Developers The partnership is evidenced by a written deed executed on 22nd October, 1988 The Firm had opened the bank account in its name with corporation bank after incorporation. Deed contains provision for sharing profits and loss 50:50. Partners have contributed the initial capital equally. The Agreement for acquisition of development right in respect of plot at Bandra from St. Peter's church has been executed on 9th June,1989 by the assessee as agent on behalf of the firm Vinky Developers and his partner and sum of ₹ 5,00,000/- was paid as consideration to St Peter's Church by issuing Pay order cheque from the said account on behalf of the firm. The Supplemental Agreement on 28th March, 1996 (i.e. after more than 6 years 9 months) with St. Peter's Church was also executed on behalf of the firm M/s Vinky Developers by putting their signature as partners. Even, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taxmann.com 181) (Mum-Trib) Amit Kumar Choudhury vs. DCIT (2018) (2 TMI 1368)(Kol) Shri Sachin Bhausaheb Nikam vs. DCIT (2016) (10TMI554)(Pune) Ajay Kumar Doshi vs. Asst. CIT (2015) (12 TMI 1750)(Kol) R. F Nangrani HUF, vs. DCIT and vice versa (2014) (12 TMI 11 75) (Mum-Trib) DCIT vs. Mohmed Yusuf Ismail Tadha (2014) (11 TMI606)(Guj) Smt. Hemlata S. Shetty vs. ACIT (2015) (12 TMI 11 74) (Mum-Trib) ITO vs. Om Namah Shivay Builders Developers (43 SOT 397) (Mum) Davangere Maganur Bassappa vs. ITO (325 ITR 139)(Kar) ITO vs. Marketers (24 SOT 59) (Amritsar) (URO) Suvardhan vs. CIT (156 Taxman 229) (Kar) 10. Upon careful consideration, we note that the assessee has received the impugned amount from the other partner in the firm M/s. Vinky Developers. The basis of A.O. s order in this case is that according to him there is no existence of partnership firm. However, this finding is not in accordance with the documents on records. As rightly noted by the ld. Commissioner of Income Tax (Appeals), there is a valid written partnership deed, wherein profit sharing ratio is 50:50. The partners have contributed initial capital equally. The firm had ..... X X X X Extracts X X X X X X X X Extracts X X X X
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