2014 (11) TMI 606

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....wing substantial questions of law were framed by this Court.            "1. Whether, on the facts and in the circumstances of the case and in view of the amendment in Section 55(2) of the I.T. Act, 1961, the Tribunal was right in holding that the amount of Rs. 33,50,000/- included in the total income of Rs. 73,00,000/- received by the assessee on account of goodwill on his retirement from the firm is not liable to be assessee to capital gains tax?           2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the amount received by the assessee towards settlement of account and in consideratio....

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.... from the aforesaid two firms was short term capital gains and taxed the same accordingly. 2.1 The assessee filed appeal before learned Commissioner of Income-tax (Appeals) contending that the impugned receipts were not in the nature of income under the provisions of the Income-tax Act and so the same should not have been included in the computation of total income. It was further contended that the receipts should have been taxed as Long Term Capital Gain because they were received in lieu of goodwill, which is a Long Term Capital Asset. As regards other receipts of Rs. 23,63,635/-, it was contended that the amount was received by the assessee as a result of various civil and criminal proceedings as such, the receipts were not in fact t....

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....ew of the matter, the order of the Tribunal is required to be interfered with. 4. Learned advocate for the assessee has supported the order of the Tribunal and contended that the Tribunal following the decision of this Court as well as the Hon'ble Supreme Court allowed the appeal of the assessee which is not required to be interfered with and the appeal is required to be dismissed. 5. We have heard learned counsel for the parties. The Tribunal has, while allowing the appeal of the assessee, considered the decision of this Court in the case of CIT VS. MOHANBHAI PAMABHAI reported in 91 ITR 393 and other decisions of this Court and the Hon'ble Supreme Court. Paragraph No. 5 of the order of the Tribunal is reproduced as under:  &n....

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....e case of CIT VS. SHREYAS CHINUBHAI 237 ITR 358 wherein it was held as under:             "That when a partner retires from a firm and receives an amount in respect of his share in the partnership, there is no transfer of interest of the assessee in the goodwill of the firm and no part of the amount so received by him would be assessable to capital gains tax under section 45 of the Act. Therefore, the Tribunal was right in holding that the amount of Rs. 1,25,092/- was not liable to tax on capital gains'. The decision of the Hon'ble Gujarat High Court in the case of CIT VS. MOHANBHAI PAMABHAI (91 ITR 393) has been affirmed by the Hon'ble Supreme Court in the case of the same assess....