TMI Blog1982 (3) TMI 85X X X X Extracts X X X X X X X X Extracts X X X X ..... circumstances of this case and the AAC's order would be read to be confirming only that amount. 2. The assessee-firm consisted of four adult partners and three minors were admitted to the benefits of partnership. The accounting year followed by the firm was samvat year 2031. In the course of this accounting period on 9-6-1975, the assessee-firm was dissolved and a dissolution deed dated 12-6-1975 was drawn up in Gujarati. A rough English translation of the dissolution deed was filed on behalf of the assessee and relied upon in these proceedings. The relevant clauses, being clauses (1), (2) and (7A) are reproduced below: "1. The said partnership business is being closed from 9-6-1975 as from that date no business of the firm shall be sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parts have been paid off their dues." "7A. The business of the said partnership business was being carried on in the premises of Municipal Census No. 1518-1 and 1518-16 in the rented premises, situated at Gaffurbhai's Chawl, opposite Govt. C-Colony on Naroda Road. The tenancy rights of both these rooms have been given to the party of the 1st part by separate agreement. The rent of these two rooms as well as of the additional premises, bearing Municipal Census Nos. 1517-A, 1518-17, 1518-18, 1518-15 and 1518-2, totalling five rooms plus original two rooms, totalling seven rooms, belonged to the partnership firm as tenants. Out of these 7 rooms, in three rooms Nos. 1517-A, 1518-17 and 1518-18, the party of the 1st part shall carry on busine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p business by the aforementioned person by charging an amount of goodwill of Rs. 12,200. It was further stated that five more rooms were taken on rent later on and tenancy rights of these seven rooms have been distributed as per clause 7A of the partnership deed and attention was invited to the recitals in clause 7A. According to this clause, three rooms were to go to Premshankar C. Mehta who paid a sum of Rs. 28,000, two rooms were to go to Bharat Stores, another firm in which some partners were common, on payment of Rs. 40,000 and the remaining two rooms as per same clause were to be utilised by the retiring partners for any other future business of theirs. We may point out that neither the ITO has recorded the facts nor the AAC has state ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f tenancy rights. The account opened with a debit of Rs. 12,200 paid to the proprietor of the business taken over by the firm for the two rooms in his tenancy which came to be used for the purpose of assessee-firm's business. Similarly, at the time of dissolution, tenancy of five rooms has been given on payments of Rs. 28,000 and Rs. 40,000. These payments have given rise to the surplus of Rs. 55,800 in the goodwill account and such a surplus will be in the nature of capital gains as tenancy rights are a capital asset. It could not be disputed by the assessee's authorised representative that provisions of section 47(ii) could not be available in the case of payment received on Rs. 40,000 from Bharat Stores. Bharat Stores was a different par ..... X X X X Extracts X X X X X X X X Extracts X X X X
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