HEMLATA S. SHETTY, MUMBAI V. ACIT CEN CIR 13, MUMBAI

ITA 1514/MUM/2010

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2513 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 9 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-12-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 23-07-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 25-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: Y P TRIVEDI; U C BOTHRA
• Keywords: Question of law
• Section: 142(1); 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI , , BEFORE SHRI SHAILENDRA KUMAR YADAV, JM AND SHRI RAMIT KOCHAR , AM ./ ITA NO. 1514/MUM/2010 ./ ITA NO. 6513/MUM/2011 ( / ASSESSMENT YEAR: 2006 - 07 ) SMT. HEMLATA S. SHETTY /APPELLANT 402, SAGAR AVENUE 54, S.V. ROAD, ANDHERI (W) MUMBAI 400058 / VS. ACIT, CENTRAL CIRCLE - 13 / RESPONDENT 11TH FLOOR, CGO BLDG. ANNEX M.K. ROAD, MUMBAI 400020 ./ PAN - ALPPS1866A / APPELLANT BY: SHRI Y.P. TRIVEDI & SHRI U.C. BOTHRA / RESPONDENT BY : SHRI RAHUL RAMAN / DATE OF HEARING : 30.10.2015 / DATE OF PRONOUNCEMENT : 01.12 .2015 / O R D E R PER SHAILENDRA KUMAR YADAV, JM THESE APPEALS ARE FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A) FOR A.Y. 2006 - 07. IN ITA NO. 1514/MUM/2010 ASSESSEE RAISED THE FOLLOWING GROUNDS: - 2 ITA NO. 1514 &6513 /MUM/2010 SMT. HEMLATA S. SHETTY 1. THE CIT(A) ERRED IN LAW AND ON FACTS IN UPHOLDING THE ACTION OF THE AO THAT THE AMOUNT RECEIVED BY THE APPELLANT ON RETIREMENT FROM PARTNERSHIP FIRM M/S. D.S. CORPORATION IS TAXABLE UNDER THE HEAD CAPITAL GAINS ON THE MISTAKEN BELIEF THAT RETIREMENT FROM PARTNERSHIP AMOUNTS TO TRANSFER WITHIN THE MEANING OF SECTION 2(47) OF TH E I.T. ACT. 2. THE CIT(A) FAILED TO APPRECIATE THE FACTS OF THE CASE AND THE RELEVANT LAW ON THE SUBJECT. 3. THE CIT(A) ERRED IN NOT FOLLOWING THE JUDGEMENT OF THE SUPREME COURT AND OF THE JURISDICTIONAL COURT. 4. THE CIT(A) ERRED IN CONSTRUING THE DEED OF RETIREMENT, UNDER WHICH NO TRANSFER HAD TAKEN PLACE, AND WITHOUT TRANSFER THERE CAN BE NO CAPITAL GAINS TAX LIABILITY. 2. ASSESSEE IS AN INDIVIDUAL AND SHE JOINED ON 16.09.2005 A PARTNERSHIP FIRM M/S. D.S. CORPORATION AS A PARTNER HAVING 20% PROFIT S HARING RATIO THEREIN. SHE RETIRED FROM THE SAID PARTNERSHIP FIRM M/S. D.S. CORPORATION ON 27.03.2006. AT THE TIME OF RETIREMENT SHE RECEIVED A SUM OF ` 30,87,98,088/ - FROM THE SAID FIRM M/S. D.S. CORPORATION. HOWEVER, AS OBSERVED BY THE LEARNED ASSESSING OFFICER, THE ASSESSEE DID NOT DISCLOSE THE AFORESAID RECEIPT OF ` 30,87,98,088/ - AS HER INCOME IN THE RELEVANT ASSESSMENT YEAR 2006 - 07. SEARCH & SEIZURE A CTION U/S. 132 OF THE ACT WERE CARRIED OUT IN 3 ITA NO. 1514 &6513 /MUM/2010 SMT. HEMLATA S. SHETTY ASSESSEES PREMISES ON 18.01.2007. NOTICES U/S. 153A, UNDER SECTION 143(2) AND 142(1) OF THE ACT WERE ISSUED AND DULY SERVED UPON THE ASSESSEE. ASSESSEE WAS CONFRONTED AND REQUESTED TO EXPLAIN AS TO WHY THE AM OUNT RECEIVED IN EXCESS OF PRINCIPAL CAPITAL CONTRIBUTION AMOUNTING TO ` 30,87,98,088/ - FROM THE SAID FIRM M/S. D.S. CORPORATION SHOULD NOT BE TREATED AS SHORT TERM CAPITAL GAIN AND BROUGHT TO TAX. THE CONCERNED ASSESSING OFFICER HAS CONSIDERED THE SUBMISSI ON ON BEHALF OF ASSESSEE BUT DID NOT ACCEPT THE PLEA OF THE ASSESSEE FOR THE REASONS GIVEN IN THE ASSESSMENT ORDER, WHICH IS REPRODUCED HEREUNDER . THE EXPLANATION OF SMT. HEMLATA SHETTY IS NOT ACCEPTABLE. THE SCHEME OF THINGS IS DETAILED HEREINAFTER - I. A PARTNERSHIP FIRM WAS FORMED BETWEEN 2 PERSONS SHRI SUDHAKAR SHETTY - 40% AND SHRI RAKESH KUMAR WADHAWAN - 60% ON 01.08.2005. II. THE ORIGINAL CAPITAL CONTRIBUTIONS BEING RS.3,20,50,000/ - . III. THEREAFTER, THE LAND BEING UNITY COMPOUND WAS PURCHASED IN TH E YEAR 2006, ON A TOTAL CONSIDERATION OF RS.6.50 CRORES. IV. SMT. HEMLATA SHETTY BECOMES A PARTNER IN M/S. D.S. CORPORATION ON 16.09.2005. THE PROFIT SHARING RATIO IS DIVIDED INTO SHRI RAKESH KUMAR WADHWAN - 60%, SHRI SUDHAKAR SHETTY - 20% AND SMT. 4 ITA NO. 1514 &6513 /MUM/2010 SMT. HEMLATA S. SHETTY HEMLAT A SHETTY - 20%. THE CAPITAL CONTRIBUTION RS.1,24,50,000/ - AND RS.52,50,000/ - RESPECTIVELY. V. 3 NEW MEMBERS WERE INTRODUCED ON 23.09.2005 AND THE PROFIT SHARING RATIOS WERE REVISED AS FOLLOWS - MR. RAKESH KUMAR WADHAWAN - 35%, MR. SUDHAKAR SHETTY - 20%, MRS. HEMLATA SHETTY - 20%, PRITHVI REALTORS & CAPITAL PVT. LTD. - 20% (NEW), MR. SARANG RAKESH KUMAR WADHAWAN - 5% (NEW). ALL THE NEW MEMBERS WERE RELATED TO/CONNECTED/CONTROLLED BY SHRI RAKESH KUMAR WADHAWAN. VI. THIS LAND WAS VALUED IN THE BALANCE SHEET OF M/S. D.S. CORPORATION ON 2006 AND THE LAND WAS REVALUED AT RS. 194. 78 CRORES. VII. THE SUM OF RS.194.78 CRORES WAS RECEIVED BY M/S. D.S. CORPORATION FROM M/S. HDIIL. VIII. A SUM OF RS.30.88 CRORES GAVE TO SHRI SUDHAKAR SHETTY AND RS.30.88 CRORES TO MS . HEMLATA SHETTY, UPON THEIR RECEIPT FROM THE FIRM M/S. D.S. CORPORATION. IX. THE REVALUATION OF LAND RESULTED IN A NOTIONAL PROFIT OF RS.154.40 CRORES, RESULTING IN 20% SHARE EACH OF SHRI SUDHAKAR SHETTY AND HIS WIFE, AT RS.30.88 CRORES EACH RESPECTIVELY. THESE AMOUNTS WERE RECEIVED BY THE SHETTY'S AND WERE DULY CREDITED IN THEIR BANK ACCOUNTS. X. NO TAX WAS PAID ON THESE REVALUED PROFITS ON THE PLEA THAT THESE WERE AMOUNTS EXEMPT AS PER PROVISIONS OF SECTION 10(2A) OF THE I.T. ACT, 1961.' 3. THE MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHORITY WHEREIN VARIOUS CONTENTIONS WERE RAISED ON BEHALF OF THE ASSESSEE AND HAVING CONSIDERED THE SAME CIT(A) CONFIRMED THE 5 ITA NO. 1514 &6513 /MUM/2010 SMT. HEMLATA S. SHETTY ORDER OF ASSESSING OFFICER. SAME HAS BEEN OPPOSED BEFORE US, INTER ALIA, SUBMI TTING THAT CIT(A) SHOULD HAVE ALLOWED THE APPEAL OF ASSESSEE. FOR THE SAME ASSESSEE RAISED VARIOUS LEGAL AND FACTUAL SUBMISSIONS AND REQUESTED TO ALLOW THE CLAIM OF ASSESSEE PRAYED. ON THE OTHER HAND THE LEARNED D.R. SUPPORTED THE ORDER OF ASSESSING OFFIC ER AND SUBMITTED THAT THE ORDER OF ITAT IN THE CASE OF SHRI SUDHAKAR SHETTY SHOULD BE FOLLOWED BECAUSE IT IS BASED ON THE SIMILAR FACTS. 4. AFTER GOING THROUGH RIVAL SUBMISSIONS AND MATERIAL ON RECORD WE FIND THAT T HE TRIBUNAL IN THE CASE OF HUSBAND SHRI SUDHAKAR SHETTY HAS DECIDED THE ISSUE AGAINST THE ASSESSEE BY OBSERVING AS UNDER: - 2.5 IN THE LIGHT OF THE ABOVE, MORE SPECIFICALLY, WHEN THE ISSUE HAS BEEN SETTLED BY THE HON'BLE JURISDICTIONAL HIGH COURT, WE FIND MERIT IN THE APPEAL OF THE ASSESSEE. T HE HON'BLE APEX COURT AS DISCUSSED BY THE HON'BLE JURISDICTIONAL HIGH COURT IN THE AFORESAID CASE ALSO, IN CIT VS. R. LINGAMALLU RAJKUMAR (2001) 247 ITR 801 HELD THAT AMOUNTS RECEIVED ON RETIREMENT BY A PARTNER IS NOT SUBJECT TO CAPITAL GAINS TAX. OUR VIEW IS ALSO FORTIFIED BY THE DECISION BY THE COORDINATE BENCH IN ACIT VS. SHRI N. PRASAD, EXECUTIVE CHAIRMAN SECUNDERABAD (ITA NO. 1200/HYD/2010) ORDER DATED 27/10/2014. 6 ITA NO. 1514 &6513 /MUM/2010 SMT. HEMLATA S. SHETTY 5. IN THIS REGARD THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE REQUESTED THAT AFTER THE DECISION WAS TAKEN IN THE CASE OF SHRI SUDHAKAR SHETTY , THE DEPARTMENT, FOLLOWING DECISION IN CASE OF SHRI SUDHAKAR SHETTYS CASE REOPENED THE CASE OF THE FIRM, M/S. D.S. CORPORATION WHEREIN SHRI SUDHAKAR SHETTY AND MRS. HEMLATA SHETTY, ASSESSEE WERE PARTNERS . T HE DEPARTMENT UNDER PROVISIONS OF SECTION 45(4) OF THE INCOME TAX ACT HAS ASSESSED THE SAME INCOME IN THE HANDS OF THE FIRM. THUS, ACCORDING TO THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE THE DEPARTMENT HAS REALIZED THE MISTAKE THAT IT CANNOT ASSESS THE PARTNERS ON ACCOUNT OF INCOME RECEIVED ON RETIREMENT UNDER SECTION 45(4) OF THE ACT. THIS FACT WAS NOT BEFORE THE ITAT AT THE RELEVANT POINT OF TIME WHEN THE CASE OF SHRI SUDHAKAR SHETTY WAS DECIDED. SO THE DECISION OF ITAT IN THE CASE OF SHRI SUDHAKAR SHETTY SHOULD NOT BE FOLLOWED BECAUSE IT WAS DECIDED IN DIFFERENT FACTS AND CIRCUMSTANCES WHICH HAVE CHANGED BECAUSE OF SUBSEQUENT DEVELOPMENTS AS DISCUSSED ABOVE. 7 ITA NO. 1514 &6513 /MUM/2010 SMT. HEMLATA S. SHETTY 6. T HE DOCTRINE OF JUDICIAL PRECEDE NTS ; JUDICIAL DISCIPLINE AND RES JUDICATA HAVE BEEN EVOLVED TO ENSURE STABILITY AND CERTAINTY IN LAW OTHERWISE ANY JUDGE COULD TAKE ANY VIEW ON THE INTERPRETATION OF THE LAW RESULTING IN CHAOS. THE JUDGEMENT OF THE HIGH COURT IN THE STATE IS BINDING AS A JUDICIAL PRECEDENT IN THAT ST ATE IS RATIO DECIDENDI. THE EXPRESSION RATIO DECIDENDI MEANS THE UNDERLYING PRINCIPLE, VIZ., THE GENERAL REASONS UPON THE DECISION HAS BEEN RENDERED. IT HAS TO BE ASCERTAINED BY ANALYSIS OF THE FACTS OF THE CASE AND THE PROCESS OF REASONING INVOLVING MAJ OR PREMISE CONSISTING OF RULE OF LAW, EITHER STATUTORY OR JUDGE MADE AND A MAJOR PREMISE CONSISTING OF MATERIAL FACTS OF THE CASE UNDER CONSIDERATION. THERE CANNOT BE A JUDICIAL PRECEDENT ON A QUESTION OF FACT. IT IS ONLY THE LEGAL PRINCIPLE LAID DOWN ON T HE BASIS OF FACT AND THE LAW THAT BECOMES JUDICIAL PRECEDENT. THE PRECEDENT MAY NOT BE B INDING WHEN THE JUDGEMENT IS PER INCURIUM I.E. IN IGNORANCE OF THE LAW OR CONTRARY TO THE LAW OR ITS OWN EARLIER DECISIONS OF OWN OR BY INADVERTENCE. 8 ITA NO. 1514 &6513 /MUM/2010 SMT. HEMLATA S. SHETTY SOMETIMES, THERE ARE CONFLICTING JUDGEMENTS OF THE SAME COURT AND THE QUESTION ARISES WHETHER LATTER JUDGEMENT OR EARLIER JUDGEMENT BECOMES A BINDING PRECEDENT. IN SUCH A SITUATION, IF THE TWO DECISIONS ARE DELIVERED BY A BENCH OF EQUAL STRENGTH, LATTER JUDGEMENT MAY BE FO LLOWED SPECIALLY WHEN THE EARLIER JUDGEMENT IS REFERRED WHILE DECIDING THE MATTER IN LATTER JUDGEMENT. T HE SAME HAS HAPPENED IN ASSESSEES CASE. AFTER THE JUDGEMENT IN THE CASE OF SHRI SUDHAKAR SHETTY DECIDED ON 9 TH SEPTEMBER, 2010 BY E BENCH , THE SIMIL AR MATTER WAS DECIDED BY THE E BENCH IN THE CASE OF R.F. NANGRANI, HUF VS. DCIT IN ITA NO. 6124/MUM/2012 ON 10 TH DECEMBER, 2014 WHEREIN THE DECISION IN THE CASE OF SHRI SUDHAKAR SHETTY WAS ALSO REFERRED. IN THE SAID CASE THE ISSUE BEFORE THE TRIBUNAL WAS WHETHER THE AMOUNT OF ` 14,15,61,370/ - RECEIVED FROM PARTNERSHIP FIRM LANDMARK DEVELOPMENTS ON RETIREMENT IS A CAPITAL GAIN CHARGEABLE TO TAX? THIS ISSUE WAS VERY SIMILAR TO THE ISSUE IN THE CASE BEFORE US. WHILE DECIDING T HE SAME ITAT E BENCH, MUMBAI IN R.F. NANGRANI, HUF (SUPRA) REVERSED ITS 9 ITA NO. 1514 &6513 /MUM/2010 SMT. HEMLATA S. SHETTY OWN DECISION TAKEN IN THE CASE OF SHRI SUDHAKAR SHETTY AND DECIDED THE MATTER IN FAVOUR OF THE ASSESSEE. WHILE DECIDING THE MATTER ITAT OBSERVED AS UNDER: - 2.5 IN THE LIGHT OF THE ABOVE, MORE SPECIFICALLY, WHEN THE ISSUE HAS BEEN SETTLED BY THE HON'BLE JURISDICTIONAL HIGH COURT, WE FIND MERIT IN THE APPEAL OF THE ASSESSEE. THE HON'BLE APEX COURT AS DISCUSSED BY THE HON'BLE JURISDICTIONAL HIGH COURT IN THE AFORESAID CASE ALSO, IN CIT VS. R. LINGAMALLU RAJKUMAR (20 01) 247 ITR 801 HELD THAT AMOUNTS RECEIVED ON RETIREMENT BY A PARTNER IS NOT SUBJECT TO CAPITAL GAINS TAX. OU R VIEW IS ALSO FORTIFIED BY THE DECISION BY THE COORDINATE BENCH IN ACIT VS. SHRI N. PRASAD, EXECUTIVE CHAIRMAN SECUNDERABAD (ITA NO. 1200/HYD/2010 ) ORDER DATED 27/10/2014. IT WAS FURTHER BROUGHT TO OUR KNOWLEDGE BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE THAT THE HON'BLE MEMBER WHO DELIVERED THE DECISION IN THE CASE OF ACIT VS. N. PRASAD, EXECUTIVE CHAIRMAN, SECUNDERABAD WAS THE SAME MEMBER WHO DELIVERED THE JUDGEMENT IN THE CASE OF SHRI SUDHAKAR SHETTY. WHILE DECIDING THE CASE OF SHRI N. PRASAD (SUPRA) THE MEMBER CLEARLY MENTIONED THAT T HEY ARE BOUND BY THE DECISION OF THE JURISDICTIONAL HIGH COURT. IT IS PERTINENT TO MENTION THAT IN THE CASE OF R.F. NAGRANI, HUF THE ITAT E BENCH DECIDED THE MATTER ON THE BASIS OF LATER JUDGEMENT OF 10 ITA NO. 1514 &6513 /MUM/2010 SMT. HEMLATA S. SHETTY THE HON'BLE BOMBAY HIGH COURT IN CASE OF CIT VS. RIYAZ A. SHAIKH (2014) 41 TAXMAN.COM 455 (BOM) WAS NOT AVAILABLE WHEN THE MATTER OF SHRI SUDHAKAR SHETTY WAS DECIDED. 7 . WE FIND THAT IN PALITANA SUGAR MILLS P. LTD. VS. STATE OF GUJARAT (AIR 2007 SC 1701 IT WAS OBSERVED AS UNDER: - IT IS WELL SETTLED THAT THE JUDGMENTS OF THIS COURT ARE BINDING ON ALL THE AUTHORITIES UNDER ARTICLE 141 OF THE CONSTITUTION AND IT IS NOT OPEN TO ANY AUTHORITY TO IGNORE A BINDING JUDGMENT OF THIS COURT ON THE GROUND THAT THE FU LL FACTS HAD NOT BEEN PLACED BEFORE THIS COURT AND/OR THE JUDGMENT OF THIS COURT IN THE EARLIER PROCEEDINGS HAD ONLY COLLATERALLY OR INCIDENTALLY DECIDED THE ISSUES RAISED IN THE SHOW CAUSE NOTICES. SUCH AN ATTEMPT TO BELITTLE THE JUDGMENTS AND THE ORDERS OF THIS COURT TO SAY THE LEAST IS PLAINLY PERVERSE AND AMOUNTS TO GROSS CONTEMPT OF THIS COURT... COURTS HAVE HELD IN A CATENA OF DECISIONS THAT WHERE IN VIOLATION OF AN ORDER OF THIS COURT, SOMETHING HAS BEEN DONE IN DISOBEDIENCE, IT WILL BE THE DUTY OF T HIS COURT AS A POLICY TO SET THE WRONG RIGHT AND NOT TO ALLOW THE PERPETUATION OF THE WRONG DOING. IN OUR OPINION, THE INHERENT POWER WILL NOT BE AVAILABLE UNDER SECTION 151, CPC AS AVAILABLE TO US IN SUCH A CASE BUT IT IS BOUND TO BE EXERCISED IN THAT MAN NER IN THE INTEREST OF JUSTICE AND PUBLIC INTEREST.' FROM THE ABOVE DECISION OF THE HON'BLE SUPREME COURT THE FOLLOWING PROPOSITION EMERGES: - (A) IT IS IMMATERIAL THAT IN A PREVIOUS LITIGATION THE PARTICULAR PETITIONER BEFORE THE COURT WAS OR WAS NOT A PARTY, BUT IF LAW ON A PARTICULAR POINT HAS BEEN LAID 11 ITA NO. 1514 &6513 /MUM/2010 SMT. HEMLATA S. SHETTY DOWN BY THE HIGH COURT, IT MUST BE FOLLOWED BY ALL AUTHORITIES AND TRIBUNALS IN THE STATE. (B) THE LAW LAID DOWN BY THE HIGH COURT MUST BE FOLLOWED BY ALL AUTHORITIES AND TRIBUNALS WHEN IT HAS BEEN DECLARED BY THE HIGHEST COURT IN THE STATE AND THEY CANNOT IGNORE IT EITHER IN INITIATING PROCEEDINGS OR DECISION ON THE RIGHTS INVOLVED IN SUCH A PROCEE DING. 8. IN THIS REGARD , WE FIND THAT THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF SIEMENS INDIA LTD. & ANR VS. K. SUBRAMAN IAN, I NCOME TAX OFFICER (1983) 34 CTR 23 OBSERVED IN PARA 24 OF THEIR ORDER AS UNDER : 24. IN EAST INDIA COMMERCIAL CO. LTD. VS. COLLECTOR OF CUSTOMS, CALCUTTA, AIR 1962 SC 1893, THE SUPREME COURT HELD THAT AN ADMINISTRATIVE AUTHORITY OR TRIBUNAL CANNOT IGNORE THE LAW DECLARED BY THE HIGHEST COURT IN THE STATE. THE SUPREME COURT POINTED OUT THAT TAKING INTO CONSIDERATION THE PROVISIONS OF ARTS. 215, 226 AND 227 OF THE CONSTITUTION IT WOULD BE ANOMALOUS TO SUGGEST THAT A TRIBUNAL OVER WHICH THE HIGH COURT HAD SUPERINTENDENCE CAN IGNORE THE LAW DECLARED BY THAT COURT AND START PROCEEDINGS IN DIRECT VIOLATION OF IT, THE RESULT BEING THAT IF A TRIBUNAL CAN DO SO / ALL THE SUBORDINATE COURTS CAN EQUALLY DO SO ON THE GROUND THAT THERE IS NO SPECIFIC PROVISION, JUST LIKE THERE IS IN THE CASE OF THE SUPREME COURT, MAKING THE LAW DECLARED BY THE HI GH COURT BINDING ON SUBORDINATE COURTS. THE SUPREME COURT FURTHER HELD THAT IT IS IMPLICIT IN THE POWER OF SUPERVISION CONFERRED ON A SUPERIOR TRIBUNAL THAT ALL THE TRIBUNALS SUBJECT TO ITS SUPERVISION SHOULD CONFORM TO THE LAW LAID DOWN BY IT, FOR SUCH OB EDIENCE WOULD BE CONDUCIVE TO THEIR SMOOTH WORKING, WHILE OTHERWISE THERE 12 ITA NO. 1514 &6513 /MUM/2010 SMT. HEMLATA S. SHETTY WOULD BE CONFUSION IN THE ADMINISTRATION OF LAW, AND RESPECT FOR LAW WOULD IRRETRIEVABLY SUFFER.' GENERALLY, EARLIER DECISIONS ARE FOLLOWED BUT THERE IS EXCEPTION TO THIS RULE. IN CA SE WHERE EITHER THE EARLIER DECISION WAS ARRIVED AT IN IGNORANCE OF THE LAW THROUGH OVERSIGHT OR THAT ON THE LAW POINT SUBSEQUENTLY, THERE IS DECISION OF SUPERIOR COURT (WHICH IN THE PRESENT CASE HON'BLE BOMBAY HIGH COURT) WHO DECIDES THE MATTER ON LAW WHE THER IN THE CASE OF THE SAME ASSESSEE OR IN CASE OF OTHER ASSESSEE. IN OTHER WORDS, IF A LAW IS DECIDED BY THE HON'BLE HIGH COURT, THEREAFTER, THE HON'BLE TRIBUNAL IS BOUND TO FOLLOW THAT LAW UNTIL AND UNLESS THE VIEW OF THE HIGH COURT IS REVERSED BY THE H ON'BLE SUPREME COURT OR STAY IS GRANTED IN RESPECT OF THE JUDGMENT OF THE HON'BLE HIGH COURT. 9 . IN THIS CONNECTION , WE FIND THAT DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. SHRI RIYAZ A. SHEIKH (2014) 41 TAXMAN.COM 455 (BOM) WHICH IS ON SIMILAR ISSUE, WAS NOT AVAILABLE WHEN THE APPEAL OF SHRI SUDHAKAR SHETTY WAS DECIDED BY ITAT . IN THE SAID CA SE, I.E. SHRI RIYAZ A. SHEIKH (SUPRA) THE HON'BLE BOMBAY HIGH COURT HELD AS UNDER: - 2. WE FIND THAT BY THE IMPUGNED ORDER, THE TRIBUNAL WHILE HOLDING THAT AMOUNTS RECEIVED BY A PARTNER ON HIS RETIREMENT FROM PARTNERSHIP FIRM ARE EXEMPT FROM CAPITAL GAINS TAX RELIED UPON THE DECISION OF THIS COURT IN THE MATTER OF PRASHANT S. JOSHI V/S. IN COME TAX OFFICER & ANR. REPORTED IN [2010] 324 ITR 154 (BOM). COUNSEL FOR 13 ITA NO. 1514 &6513 /MUM/2010 SMT. HEMLATA S. SHETTY THE REVENUE IS UNABLE TO POINT OUT AS TO HOW THE DECISION IN THE MATTER OF PRASHANT S. JOSHI (SUPRA) INTER ALIA HOLDING THAT NO CAPITAL GAINS ARE PAYABLE BY AN ERSTWHILE PARTNER ON A MOUNTS 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 REPORTED IN [1986] 162 ITR 420 AND IT HAS NOT BE EN 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 REPORTED IN 115 ITR 95 AND THE SAME HAS BEEN REVERSED BY THE APEX COURT IN TRIBHUVANDAS G. PATEL V/S. CIT REPORTED IN 263 ITR 515. THIS COURT IN THE MATTER OF PRASHANT S. JOSHI (SUPRA) HAS ALSO REFERRED TO THE D ECISION OF TRIBUVANDAS G. PATEL (SUPRA) RENDERED BY THIS COURT AND ITS REVERSAL BY THE APEX COURT. MOREOVER, THE DECISION OF THIS COURT IN THE CASE OF PRASHANT S. JOSHI (SUPRA) PLACED RELIANCE UPON THE DECISION OF THE SUPREME COURT IN THE CASE OF CIT V/S. R. LINGAMALLU RAJKUMAR REPORTED IN [2001] 247 ITR 801, WHEREIN IT HAS BEEN HELD THAT AMOUNTS RECEIVED ON RETIREMENT BY A PARTNER IS NOT SUBJECT TO CAPITAL GAINS TAX. IN THE ABOVE CIRCUMSTANCES, WE SEE NO REASON TO ENTERTAIN THE PROPOSED QUESTION OF LAW. W E WERE MADE AWARE BY LD. AUTHORIZED REPRESENTATIVE THAT AFTER THE DECISION OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF RIYAZ A. SHEIKH (SUPRA) ITAT E BENCH, MUMBAI BY FOLLOWING THE SAID DECISION HAS TAKEN A VIEW WHEREIN THE DECISION IN THE CASE OF SHRI SUDHAKAR SHETTY HAS BEEN 14 ITA NO. 1514 &6513 /MUM/2010 SMT. HEMLATA S. SHETTY REVERSED. IN V IEW OF THIS THE ISSUE IN THE CASE OF PRESENT ASSESSEE HAS TO BE DECIDED IN ITS FAVOUR BY FOLLOWING THE DECISION OF JURISDICTIONAL HIGH COURT IN THE CA SE OF RIYAZ A. SHEIKH (SUPRA) . IN VIEW OF ABOVE LEGAL DISCUSSION, W E HOLD THAT THE AMOUNT RECEIVED BY ASSESSEE ON RETIREMENT FROM PARTNERSHIP FIRM IS NOT TAXABLE UNDER THE HEAD CAPITAL GAINS . THE ASSESSING OFFICER IS DIRECTED ACCORDINGLY. ITA NO. 6513/MUM/2011 - AS SESSEE S APPEAL : AY 2006 - 07 10 . THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE LEVY OF PENALTY U/S 271(1)(C) OF THE I.T. ACT. SINCE WE HAVE ALREADY DECIDED THE APPEAL ON MERIT IN ITA NO. 1514/MUM/2010 (SUPRA) , THE ISSUE RAISED BY THE ASSESSEE IN THIS APPEAL BEING ACADEMIC AND THEREFOR E, THE SAME IS DISMISSED AS SUCH. 11 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IN ITA NO. 1514/MUM/2010 IS ALLOWED WHILE THE ASSESSEES APPEAL IN ITA NO.6513/MUM/2011 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 1 ST DECEMBER , 2015. 01.12.2014 SD/ - SD/ - (RAMIT KOCHAR) ( SHAILENDRA KUMAR YADAV ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI , DATED 1 ST DECEMBER , 2015 15 ITA NO. 1514 &6513 /MUM/2010 SMT. HEMLATA S. SHETTY / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) - 37 , MUMBAI 4. / THE CIT , CENTRAL - I , MUMBAI 5. , , / DR, H BENCH ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER //TRUE COPY// /ASSTT. REGISTRAR) , /ITAT, MUMBAI N.P.