TaxTMI 
TaxTMI 
1984 (12) TMI 81
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....e assessee was a partner in the firm of M/s White-field Industrial Corporation which came into existence on 23rd March 1966, for the purpose of manufacturing electronic components and steel products. There were several changes in the constitution of the firm. The firm purchased 58.22 acres of agricultural lands in Seegahalli, Hoskote Taluk in 1972 from Krishna Mining Co., Gudur. Permission was obtained from the Dy. CIT, Bangalore, for converting the said land for non-agricultural purposes. In order to meet the conversion fees new partners were brought in April 1979. The continuing partners, of whom the assessee was one, also brought in moneys for this purpose in November, 1979. The land was revalued because of its conversion for non-agricul....
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....IT(A) held that the Bombay case was distinguishable. He relied on the decision of the Calcutta High Court in CIT vs. Bhupinder Singh Atwal (1981) 20 CTR (Cal) 291 : (1981) 128 ITR 67 (Cal) and held as follows: "It is significant to note from the facts reiterated above that the appellant alongwith other retired taking from the firm whatever amount was due to the time of retirement. The new set of partners who hand enough financial resources continued the business of the firm. If the facts of the appellant's case is properly understood and interpreted, the position is that the appellant lady has been paid merely the amount which was due to her at the time of retirement and there has been no relinquishment of her rights in the assets of the....
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....net partnership assets after deduction of all liabilities and prior charges might be determined on taking accounts on the footing of national sale of partnership assets and be paid to him but the determination and the payments of his share might not invariably be done in that manner and it was quite conceivable that, without taking accounts on the footing of national sale, by mutual agreement, a retiring partner might be receiving an agreed lump sum amount for going out as and by way of consideration for transferring, releasing, assigning or relinquishing his interest in the partnership assets to the continuing partners and if the retirement takes this form whether payment on that basis would be exigible to tax as capital gains, as are the ....
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....r the head 'capital gains' rejecting the assessee's contention that the said sum was received on dissolution of the firm bringing it with the provisions of s. 47(ii) of the Act. The Tribunal held that this was not a case of dissolution of the firm. Quoting from the head lines, at p. 98 the High Court held as follows: "In the instant case, having regard to the particular mode employed by the assessee and the continuing partners to effect and bring about retirement of the assessee from the partnership, the transaction will have to be regarded as amounting to 'transfer' within the meaning of s. 2(47) of the Act, inasmuch as the assessee could be said to have assigned, released and relinquished his interest and share in the partnership and i....
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....he partnership and, therefore, the consequences of the distribution, division or allotment of assets to the partners which flowed upon dissolution after discharging of liabilities was nothing but a mutual adjustment of rights between the partners and there was no question of any extinguishment of the firm's rights in the partnership assets amounting to a transfer of assets within the meaning of s. 2(47) of the IT Act, 1961. There was no involvement of a transfer of assets even in the sense of any extinguishment of the firm's rights in the partnership when the distribution took place upon dissolution. In order to attract s. 34(3)(b) of the IT Act, 1961, it was necessary that the sale or transfer of the assets must be by the assessee to a per....