TaxTMI 
TaxTMI 
2014 (12) TMI 1175
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.... During hearing of this appeal, Shri Rakesh Joshi, ld. Counsel for the assessee challenged the view of the ld. Commissioner of Income tax (Appeals) holding that the profit from surrender of rights is liable to be assessed as long terms capital gains u/s 45(1) of the Income-tax Act, 1961(hereinafter the Act). The ld. Counsel out rightly canvassed that the impugned issue is covered by the decision of the Pune Bench of the Tribunal in the case of Mr. Riyaz A. Shekh vs ITO (ITA No. 352/PN/2006) order dated 29/10/2010 and also from Hon'ble jurisdictional High Court in the case of CIT vs Riyaz A. Shekh (2014) 41 taxman.com 455 (Bom), Prashant S. Joshi vs ITO (324 ITR 154)(Bom.) and another decision from the Mumbai Bench of the Tribunal in ITO vs ....
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....hority placed reliance upon the decision of the Mumbai Bench in Sudhakar Shetty (2011) 130 ITD 197 (Mum.) and another decision in N.A. Mody vs CIT (1986) 162 ITR 420 decided against the assessee confirming the stand taken in the assessment order. The aggrieved assessee is in appeal before this Tribunal. 2.3. If the observation made in the assessment order, making the addition as long term capital gain, conclusion drawn in the impugned order, material available on record and the assertion made by the ld. Respective counsel, if kept in juxtaposition and analyzed, the issue before us is about taxability of amount received by the assessee on retirement from the partnership firm. We note that the Pune Bench of the Tribunal, on identical fact in....
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....the retired partner to the continuing partners and the amount received by the retiring partner is no "capita gain" under section 45 of the Act. Further, the Learned Counsel for the appellant has correctly pointed out that the decision of the Hon'ble Bombay High court in Tribhuvandas G. Patel (supra) followed in the case of N.A. Mody (supra) has been reversed by the Hon'ble Supreme Court in the case of Tribhuvandas G. Patel reported 236 ITR 515(SC) on this aspect of the matter. In fact, the Hon'ble Bombay High court in a recent decision in the case of Prashant S. Joshi (supra) has noted the aforesaid legal position. In this circumstances the reliance placed by the authorities below on the judgment of the Hon'ble Bombay High Court in the case....
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....pital gains are payable by an erstwhile partner on amounts received on retirement would not be applicable to the present case. The only submission on behalf of the revenue is that there was an earlier decision of this Court in the matter of N.A. Mody V/s. CIT [1986] 162 ITR 420/24 Taxman 219 (Bom.) and it has not been considered in the decision rendered in the matter of Prashant S. Johsi (supra). 3. In the impugned order, the Tribunal does refer to the decision of this Court in the matter of N.A. Mody (supra) and states that it follows the decision of this Court in the matter of CIT v/s. Tribhuvandas G. Patel (1978) 115 ITR 95 (Bom.) and the same has been reversed by the Apex Court in Tribhuvandas G. Patel v/s. CIT (1999) 236 ITR 515. This....
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....be chargeable to tax as income of the firm. However, in view of this decision from Hon'ble Apex Court, we are of the view that in case of retirement of a partner, the amount so received, cannot be brought to tax. Our view is further fortified by the decision from Chalasani Venkateswara Rao vs ITO (25 Taxman.com 378)(AP). The division Bench of Hon'ble Andhra Pradesh High court in L. Raghu Kumar followed the decision of the Hon'ble Gujarat High Court in CIT vs. Mohan Bhai Pama Bhai (1973) 91 ITR 393 (Guj.) and held that no transfer is involved when a retiring partner receives at the time of retirement from the firm, his share in the partnership asset either in cash or any other asset. The ratio laid down in P.H. Patel (171 ITR 128) wherein it....