2007 (9) TMI 227

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....Act?" The facts of the case lie in a narrow compass: The assessee was a partner in the registered firm M/s. Kapoor Brothers having a one-fifth share in the profit or loss of the said firm. The assessee retired from the partnership firm with effect from April 1, 1986, and on the date of retirement, the credit balance in the capital account of the firm was Rs. 2,11,637 which was transferred to the unsecured loan account. The assessee received his share from the capital assets of the firm. However, he did not claim his share in the investment allowance reserve which amounts to Rs. 1,99,211. The ease of the assessing authority was that the assessee relinquished his claim to the extent of Rs. 1,99,211 which was his share in the investment ....

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....nsel appearing for the appellant, is unable to satisfy us that the investment allowance reserve is also an asset of the firm and in the event of retirement, the partner is entitled to receive his share from the investment allowance reserve also. The question involve is as to whether such allowance other than the capital assets in the capital account, shall be treated as an asset of the firm and in the event of retirement, such investment allowance or goodwill shall be treated as deemed gift, no longer res integra? In the case of CCT v. T.M. Louiz reported in [2000] 245 ITR 831, the Supreme Court has considered the meaning and application of gift as defined in section 4(1)(c) of the Act. In that case, after the partner retired from the pa....