TaxTMI 
TaxTMI 
2022 (6) TMI 1270
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....refore, after recording reasons, a notice u/s.148 of the Act was issued on 20.03.2014 which was duly served on the assessee. Subsequently, notices u/s 143(2) and 142(1) dated 18.06.2014 were also issued and served on the assessee. The assessee had filed objections against the reopening of assessment which were disposed off vide order dated 21.08.2014. The assesse had filed a writ petition against this order dated 21.08.2014 which was treated as dismissed by the Hon'ble Bombay High Court as the same was withdrawn. Thereafter, notice u/s 142(1) was again issued on 23.02.2015 requesting the assessee to provide various details. After considering the various submissions made by the assessee, the re-assessment was completed u/s 143(3) r.w.s. 147 of the Act. 3. Further, the facts are that the assessee was a partner in M/s P.N.Writer & Co. A fresh partnership deed was executed in 1997 wherein the name of the assessee was excluded from the partnership firm. However, as claimed by the assessee, this new partnership deed was prepared without her consent and she was shown as retired from the said firm without her knowledge. The assessee, therefore, filed various suits against the partners....
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....ondition no.9 which was in the name of the appellant as well as in the name of her husband. 5. The Assessing Officer was of the view that all the above facts showed that the arbitration award of Rs..28 crores was not awarded only with reference to the retirement of the assessee from the partnership firm. The assessee was asked to provide details of basis on which arbitration award was claimed and awarded. No specific basis could be given by the assessee, but from the details submitted by the assessee it could be inferred that the market value of assets held by the firm could be the basis. The assessee submitted that she had provided list of assets held by M/s P.N.Writer & Co. before the Arbitrator and on the basis of market value of these assets, she claimed a hefty arbitration award which was settled at Rs. 28 crores. 6. The Assessing Officer had also issued summons w/s 131 of the Act and recorded the statement of Shri Denzil Dsouza, partner of M/s.P.N.Writer & Co., which has been scanned and reproduced at pages 13 to 16 of the assessment order. In his statement, Shri Denzil Dsouza had stated that the arbitration amount of Rs..28 crores was not an amount paid to retiring partner....
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....unt of her retirement from M/s P.N.Writer & Co. which was not taxable. The assessee also did not agree with the statement given by Shri Denzil Dsouza. 9. The submissions filed by the assessee were duly considered by the Assessing Officer but were not found tenable. Besides the observations mentioned earlier, the Assessing Officer further observed that as per the records of Registrar of Partnership of Firm, the assessee's name appeared in the records as a partner till the year in which the Arbitration Award was passed. Even after receipt of the Arbitration Award, the name of the assessee was not removed from the record of Registrar of Partnership Firm. The Assessing Officer was of the view that till such date the assessee's name appeared as a partner in the records of Registrar of Partnership Firm, she could not be treated as retired from the firm. On declaration of arbitration order, the assessee wrote a letter to the Registrar of Firm on 17.09.2009 intimating that earlier she had caused a notice dated 31.07.2006 to desist from registering any form or deeds in connection with M/s P.N. Writer & Co and now she was withdrawing the said notice and that she had no objection to ....
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....2. "The appellant prays that the order of the Ld.CIT(A) on the above grounds be set aside and that of the AG be restored." 3. "The appellant craves leave to amend or after or add a new ground which may be necessary." 13. At the time of hearing Ld. AR brought to our notice similar issue was adjudicated by the ITAT in A.Y. 2010-11 in ITA.No. 3523/Mum/2017 and decided the issue in favour of the assessee Therefore the appeal is directly covered in favour of the assessee. 14. On the other hand, Ld.DR relied on the orders of the lower authorities. 15. Considered the rival submissions and material placed on record, we observed that exactly similar issue was considered and decided by the Coordinate Bench in assessee's own case in ITA.No. 3523/Mum/2017 dated 02.04.2018, the relevant decision is reproduced below: - "20. As regards the merits of the case, we find that the assessee has received an arbitration award for Rs.28 crores, upon relinquishment of her rights in the partnership of M/s. P. N. Writer & Co. Here it may be gainful to recount the brief history of the case which leads to the arbitration ward. The assessee was a partner in M/s P.N.Writer & Co. A fresh partnership deed w....
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....tioned in condition no.9 which was in the name of the appellant as well as in the name of her husband. 22. When the above facts are viewed in the light of the fact that there are no positive balance of the capital account of the assessee with M/s. P. N. Writer & Co., the question of the balance in her capital account being returned back to her certainly does not arise. The above facts clearly indicate that the arbitration award was received by the assessee not for retirement from partnership firm but was in lieu of relinquishment of all her rights, claim and demand of any nature whatsoever against the partnership firm M/s P.N.Writer & Co. and all other entities owned and controlled by the firm and partners and for withdrawing all the Suits against all the entities. It is further to be noted here that as per para 9 of the concerned terms, the assessee and her husband who had nothing to do with the said firm in any capacity are to execute all necessary documents to facilitate transfer of properties (listed at a. to f. under para 9 of Consent Terms) presently standing in their names either to the other partners of the firm and/or to persons nominated by them. The ld. Commissioner of....
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.... never given. As rightly observed by the ld. Commissioner of Income Tax (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. 25. As rightly held by the ld. Commissioner of Income Tax (Appeals) since the Arbitration Award is in cash on the touch stone of the Hon'ble jurisdictional High Court decision in the case of Mahindra & Mahindra Limited v CIT 261 ITR 501, section 28(iv) cannot be invoked. However, the ld. Commissioner of Income Tax. (Appeals) is very correct in holding that the same is taxable u/s. 56(1) as income from other sources. The fact remains that the assessee has received benefit of Arbitration Award for conditions, which included giving up her rights and interests in assets which have no connec....