2000 (9) TMI 24

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....me-tax Act, 1961?" The facts giving rise to this reference are as under: The assessee along with his father, Babubhai alias Ranchhodbhai Panchal, and two brothers were partners in a firm named Panchal Engineering Works. There were other four partners who were real brothers of the assessee. A dispute arose between the partners and on July 23, 1977, the other four partners separated from the said firm to start a new firm in the name and style of New Panchal Works. At the time of separation of the abovementioned partners from Panchal Engineering Works, the plant and machinery as also two cars were revalued at a sum of Rs. 1,60,000 and were divided amongst the partners in their profit-sharing ratio. It was done by debiting the machineries....

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....e into money or not, arising from business or the exercise of a profession." Without reference to any case law on the subject, in our considered opinion, on the plain language of clause (iv) of section 28, the amount received by the assessee as a partner in the erstwhile partnership, on separation of some of the partners, cannot be described as a benefit or perquisite having arisen from the business or the exercise of a profession. The amount has been received by the assessee when four of his partners separated from the erstwhile partnership and shares of erstwhile partners in that firm were divided along with the assets. Section 41 contains provisions for charging profit to tax and the relevant sub-section (2) reads as under: "Whe....