1984 (5) TMI 73

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....early states that a sum of Rs. 10,000 was paid to the assessee towards its share in the goodwill of the firm. In fact, the goodwill of the aforesaid firm was not appearing as an asset in its balance sheet, but, for the purpose of settling the account of the retiring assessee, its share of the goodwill was valued at Rs. 10,000 and the same was brought into accounts and credited to the retiring partner's account. The amount paid to the assessee consisted of the aforesaid sum of Rs. 10,000 as goodwill, another sum of Rs. 4,842 as the assessee's share in the current profits and the balance amount representing the assessee's share in the other assets of the aforesaid firm. The ITO assessed the sum of Rs. 4,842 and there is no dispute about the s....

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....tirely different and the AAC erroneously relied on the same. 4. Shri Roy Alphonso, the learned representative for the department, on the other hand, urged before us that the AAC was quite correct in his decision. He said that there was a difference between the dissolution of a firm and the retirement of a partner. He referred to the decisions in the cases of CGT v. P. Gheevarghese [1972] 83 ITR 403 (SC), CIT v. Tribhuvandas G. Patel [1978] 115 ITR 95 (Bom.) and CIT v. H.R. Aslot [1978] 115 ITR 255 (Bom.) in support of his contention. His point was that the sum of Rs. 10,000 received by the assessee as its share in the goodwill of the firm was rightly treated as a revenue receipt assessable under the head 'Profits and gains of business or....

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.... case of CIT v. Rai Bahadur Jairam Valji [1959] 35 ITR 148. Again, the assessee firm in that case was engaged in several business activities and the managing agency and selling agency of the aforesaid mill was only one such activity. Hence, the Court held that any amount received in the normal course of business for the determination of the agency agreement was a trading receipt. In the case before us the facts are entirely different. In the instant case, a partner retires from the firm and takes the entire amount appearing to its credit in its capital account in the books of the firm. The ITO himself has treated the retiring partners' share in all the assets as capital receipts and has not taxed the same. In our opinion, he has rightly don....