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of <h1>Retiring partner's settlement not a transfer u/s 2(47); no capital gains taxable on retirement receipts</h1> SC dismissed the revenue's appeal, upholding HC's view that amounts received by an assessee on retirement from partnership firms, representing the ... Scope of the term 'transfer' u/s 2(47) - Capital Gains - Firm - Retirement Of Partner - Whether, the excess amount received by the assessee on retirement from the two partnership firms is assessable to capital gains ? - HELD THAT:- The High Court has held that there was no transfer of any assets as contemplated by the expression 'transfer' as defined in section 2(47) of the Income-tax Act. The High Court had placed reliance on the judgment of the Gujarat High Court in CIT v. Mohanbhai Pamabhai [1971 (9) TMI 56 - GUJARAT HIGH COURT], wherein it has been held that where a partner retires from a partnership and the amount of his share in the net partnership assets after deduction of liabilities and prior charges is determined on taking accounts in the manner prescribed by the relevant provisions of the partnership law there is no element of transfer of interest in the partnership assets by the retired partner to the continuing partners. The said judgment of the Gujarat High Court has been affirmed by this court in Addl. CIT v. Mohanbhai Pamabhai [1987 (2) TMI 59 - SC ORDER].Thus, we find no merit in this appeal and the same is, therefore, dismissed. Issues involved: Interpretation of the term 'transfer' u/s 2(47) of the Income-tax Act in the context of excess amount received by the assessee on retirement from partnership firms.Summary:The Supreme Court addressed the appeal by the Revenue challenging the Andhra Pradesh High Court's judgment regarding the assessability of the excess amount received by the assessee on retirement from two partnership firms as capital gains. The High Court's decision was based on the interpretation of the term 'transfer' u/s 2(47) of the Income-tax Act. It was noted that according to the Gujarat High Court's judgment in CIT v. Mohanbhai Pamabhai, the retirement of a partner from a partnership does not constitute a transfer of interest in the partnership assets. This interpretation was upheld by the Supreme Court in Addl. CIT v. Mohanbhai Pamabhai. Consequently, the Supreme Court found no merit in the Revenue's appeal and dismissed it, with no order as to costs.
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