CHANDRAHAS A JANI THROUGH L/H NIRAV JANI, MUMBAI V. ASST CIT 11(2), NAGPUR

ITA 2353/MUM/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 88640 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 11 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2015
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 10-03-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 10-04-2012
• Court: TRIBUNAL
• Assessee Lawyers: IN CIRCUMSTANCES OF CA SE
• Keywords: Capital asset; Fair market value

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI VK;DJ VIHYH; VF/KDJ.K] LH U;K;IHB EQACBZ BEFORE SHRI VIJAY PAL RAO , JUDICIAL MEMBER AND SHRI RAJENDRA, ACCOUNTANT MEMBER JH FOT; IKY JKO] U;KF;D LNL; ,OA JH JKTSUNZ] YS[KK LNL; DS LE{K ITA NO. 2353 /MUM/2012 ASSESSMENT YEAR: - 2006 - 07 MR. CHANDRAHANS A. JANI THROUGH L/H NIRAV JANI FLAT NO. 57, 12 TH FLOOR, AMEETA BLDG, OPP. CHAVAN CENTRE, GEN. J. BHOSALE MARG, MUMBAI 400 021. VS.` ASSTT. COMMISSIONER OF INCOME TAX , 11(2), MUMBAI. PAN: - ADAPJ 0980 F APPELLANT / VIHYKFKHZ RESPONDENT / IZR;FKHZ ORDER PER VIJAY PAL RAO, JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 12.03.212 OF CIT(A) FOR THE A.Y. 2006 - 07. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS. 7,46,005/ - AS LONG TERM CAPITAL GAIN ON DISSOLUTION OF THE FIRM IN WHICH THE APPELLANT WAS A PARTNER. ASSESSEE BY / FU/KKZFJRH FD VKSJ LS SHRI DHARMESH SHAH REVENUE BY / JKTLP DH VKSJ LS SHRI PREMANAND J. DATE OF HEARING 10.03.2015 DATE OF PRONOUNCEMENT 18 .03.2015 ITA NO. 2353/MUM/2012 ASSESSMENT YEAR: - 2006 - 07 2 | P A G E 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) FAILED TO APPRECIATE THE FACT THAT THE APPELLANT HAS NO RIGHT IN ANY IMMOVABLE PROPERTIES OR IN GOODWILL OF THE ERSTWHILE FIRM IN WHICH HE WAS A PARTNER. 2. THE BRIEF FACTS GIVING RISE TO THE CONTROVERSY OF ASSESSMENT OF CAPITAL GAIN ON DISSOLUTION OF FIRM ARE THAT THE ASSESSEE WAS A PARTNER IN PARTNERSHIP FIRM M/S. GAGRAT & CO ADVOCATES SOLICITOR FORMED VIDE PARTNERSHIP DATED 18 - 5 - 2000. THE PARTNERSHIP WAS DISSOLVED ON 11.0 4.2005 AND ASSESSEE RECEIVED AN AMOUNT OF RS. 9,30,005/ - ON DISSOLUTION OF SAID FIRM APART FROM HIS OWN CAPITAL BALANCE AND INTEREST IN THE FIRM . T HE SAID AMOUNT WAS RECEIVED AS PER THE ARBITRATION AWARD DATED 16.09.2005 PASSED BY THE ARBITRAL TRIBUNAL. T HE ASSESSEE CLAIMED THAT THIS AMOUNT OF RS. 9,30,005/ - WAS RECEIVED BY THE ASSESSEE NOT ON ACCOUNT OF ANY SPECIFIC ITEM OF PARTNERSHIP PROPERTY DISTRIBUTED OR TRANSFERRED BUT IT IS THE RIGHT TO OBTAIN HIS SHARE OF PROFIT FROM FIRM DURING THE SUBSISTENCE OF THE PARTNERSHIP DEED AND ON DISSOLUTION OF THE FIRM, THE ASSESSEE GOT HIS VALUE IN THE SHARES IN THE PARTNERSHIP ASSETS. IT WAS FURTHER CLAIMED THAT THE PAYMENT RECEIVED IS NOT REVENUE RECEIPT CHARGEABLE TO TAX U/S 28( IV ) OF THE ACT. IN SUPPORT OF THE CLA IM THE ASSESSEE HAS RELIED UPON THE VARIOUS JUDGMENTS. THE ASSESSING OFFICER DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE AND ASSESSED THE AMOUNT OF RS. 9,30,005/ - TO TAX AS LONG TERM CAPITAL GAIN. 3. ON APPEAL, THE ASSESSEE CHALLENGED THE ACTION OF ASSE SSING OFFICER AND ALSO TOOK THE ADDITIONAL GROUND REGARDING THE INCORRECT AMOUNT OF RS. 9,30,005/ - ASSESSED BY THE ASSESSING OFFICER INSTEAD OF CORRECT AMOUNT OF RS. 7,46,005/ - . IN THE REMAND PROCEEDINGS, THE ASSESSING OFFICER FOUND THAT THE CORRECT AMOUNT IS RS. 7,46,005/ - AND NOT RS. 9,30,005/ - . AS REGARDS THE ITA NO. 2353/MUM/2012 ASSESSMENT YEAR: - 2006 - 07 3 | P A G E ISSUE OF ASSESSABILITY OF THE SAID AMOUNT TO TAX IN THE HANDS OF THE ASSESSEE, THE CIT(A) HAS CONFIRMED THE ACTION OF ASSESSING OFFICER. 4. BEFORE US, THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSES SEE HAS SUBMITTED THAT AS PER THE PARTNERSHIP DEED DATED 18.5.2000 , T HE GOODWILL AND BUSINESS PREMISES WERE SPECIFICALLY BELONG TO MR. J.R. GAGRAT ONE OF THE PARTNERS OF THE PARTNERSHIP FIRM AND, THEREFORE, ON DISSOLUTION THE AMOUNT RECEIVED BY THE ASSESSE E IS NOT AGAINST ANY TRANSFER OR ASSIGNMENT OF ANY RIGHT OF THE ASSESSEE IN THE GOODWILL OR PREMISES ON WHICH THE ASSESSEE DID NOT HAVE ANY RIGHT. HE HAS REFERRED CLAUSE NO. 2.5, 6, 6.4 AND 6.5 OF THE PARTNERSHIP DEED AND SUBMITTED THAT AS PER THE PARTNER SHIP DEED THE NAME AND GOODWILL OF THE FIRM BELONG TO M/S J.R. GAGRAT ALONG WITH THE RIGHT TO THE BUSINESS PREMISES. HE HAS ALSO REFERRED THE ARBITRATION AWARD DATED 16.09.2005 AND SUBMITTED THAT THE AMOUNT IS RECEIVED IN PURSUANT TO THE ARBITRATION AWARD, WHEREIN, IT HAS BEEN SPECIFICALLY HELD THAT GOODWILL AND BUSINESS PREMISES BELONGS TO MR. J.R GAG RAT AND NOT TO OTHER PARTNERS OF THE FIRM. THUS THE LD. AUTHORIZED REPRESENTATIVE HAS SUBMITTED THAT THE AMOUNT RECEIVED FROM THE PARTNERSHIP FIRM TOWARDS FULL AND FINAL SETTLEMENT OF HIS SHARE AND NOT TOWARDS ANY ASSIGNMENT OF ANY SPECIFIC ASSET OR TRANS FER OF ANY ASSET IN THE FIRM. IN SUPPORT OF HIS CONTENTION HE HAS RILED UPON THE FOLLOWING DECISIONS: - (I) CIT VS. R. LINGMALLU RAGHUKUMAR [ 247 ITR 801] (II) TRIBHUVANDAS G. PATEL VS. CIT [236 ITR 515] (III) CIT VS. RIYAZ A. SHEIKH [ITAL NO. 1969 OF 2011] DATED 26.02.2 013 (IV) PRASHANT S. JOSHI V. ITO [324 ITR 154] (V) CHALASANI VENKATESWARA RAO VS. ITO [349 ITR 423] (VI) SMT. DURDANA KHATOON V. DCIT [ 93 ITD 15] (VII) NISHA CAPITAL SERVICES PVT. LTD. VS. CIT [ITA NO. 5382/MUM/2013] DATED 18.12.2014. ITA NO. 2353/MUM/2012 ASSESSMENT YEAR: - 2006 - 07 4 | P A G E (VIII) ITO VS. RAJNISH M. BHANDARI [ITA NOS. 469/PN/11] DATED 17.07.2012. 5. ON THE OTHER HAND, THE LD. DR HAS RELIED UPON THE ORDERS OF AUTHORITIES BELOW. 6. HAVING CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD, WE FIND THAT ERSTWHILE PARTNERSHIP FIRM M/S GAGRAT & CO. WAS FORMED VIDE PARTNERSHIP DEED DATED 18.5.2000. AS PER THE PARTNERSHIP DEED, THE NAME AND GOODWILL OF THE FIRM M/S GAGRAT & CO. SH ALL BELONG TO M/S J.R. GAGRAT ONLY AND ITS USER TO THE OTHER PARTNERS SHALL NOT CREATE ANY RIGHT OR TITLE IN THEM WHATSOEVER . FURTHER AS PER CLAUSE 6.4 AND 6.5 ALL RIGHTS, TANGIBLE OR INTANGIBLE, BENEFITS AND INTEREST IN THE PREMISES (BUSINESS PREMISES) SHALL BE CONTINUOUS OR DEEMED TO CONTINUE AND BELONG TO MR. J. R. GAGRAT ONLY. THUS THE OTHER PARTNERS OF THE PARTNERSHIP FIRM INCLUDING THE ASSESSEE DID NOT ACQUIRE ANY RIGHT OR INTEREST EITHER IN THE GOODWILL OF THE FIRM OR IN THE BUSINESS PREMISE OF THE FIRM. WE FURTHER NOTE THAT THE AMOUNT IN QUESTION WAS RECEIVED BY THE ASSESSEE IN PURSUANT TO THE ARBITRATION AWARD DATED 16 .09.2005. FROM THE PERUSAL OF THE ARBITRATION AWARD, IT IS CLEAR THAT IT WAS A PAYMENT TO THE ASSESSEE AS FULL AND FINAL SETTLEMENT OF ALL DUES AND RIGHTS WHATSOEVER NATURE WHETHER PAST, PRESENT OR FUTURE AS REGARDS THE ERSTWHILE FIRM AND FURTHER FOR HAND ING OVER THE QUIET, VACANT AND PEACEFUL POSSESSION OF THE SAID PREMISES TO MR. J. R. GAGRAT. THUS IT IS CLEAR THAT THE AMOUNT WAS PAID ONLY AS A FULL AND FINAL SETTLEM ENT OF THEIR RIGHTS IN THE FIRM AND NOT FOR RELINQUISHMENT OF ANY RIGHT OR INTEREST IN AN Y SPECIFIC ASSET OF FIRM. EVEN, OTHERWISE, WE NOTE THAT THE AMOUNT RECEIVED BY THE ASSESSEE BEING A PARTNER OF A ERSTWHILE FIRM ON DISSOLUTION OF THE FIRM IS NOT TAXABLE IN THE HANDS OF THE ASSESSEE IN VIEW OF THE VARIOUS JUDGMENTS RELIED UPON BY THE ASSES SEE. IN CASE OF NISHA CAPITAL ITA NO. 2353/MUM/2012 ASSESSMENT YEAR: - 2006 - 07 5 | P A G E SERVICES PVT. LTD. VS. CIT (SUPRA) , THE CO - ORDINATE BENCH OF THIS TRIBUNAL AFTER CONSIDERING ALL THE RELEVANT JUDGMENTS ON THIS POINT HAS HELD IN PARA 15 TO 18 AS UNDER: - 15. THUS THE ISSUE OF TAXABILITY OF THE AMOUNT PAI D TO A RETIRING PARTNER TOWARDS THE SHARE IN THE ASSET WAS DECIDED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. AS IT IS CLEAR FROM THE FINDING OF THE HON'BLE SUPREME COURT THAT THIS ISSUE WAS ALREADY SETTLED BY THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. MOHAN BHAI PAMABHAI (165 ITR 166) AS WELL AS IN THE CASE OF CIT VS. SUNIL SIDDHARTHBHAI VS. CIT (156 ITR 509). IN THE CASE OF MOHANBHAI PAMABHAI (SUPRA ), THE HONBLE GUJARAT HIGH COURT I N (91 ITR 393) HELD THAT INTEREST OF A PARTNER IN A PARTNERSHIP FIRM HAS NO INTEREST IN ANY SPECIFIC ITEM OF PARTNERSHIP FIRM. IT IS THE RIGHT TO OBTAIN HIS SHARE OR PROFIT FROM TIME TO TIME DURING THE SUBSISTENCE OF THE PARTNERSHIP AND DISSOLUTION OF THE PARTNERSHIP OR TOWARDS RETIREMENT FROM PARTNERSHIP TO GET THE VALUE OF SHARE IN THE NET PARTNERSHIP ASSET WHICH REMAIN AFTER SATISFYING THE DUE DEBTS AND LIABILITIES OF THE PARTNERSHIP. THE SAID AMOUNT RECEIVED BY THE RETIRING PARTNER IS HIS SHARE IN THE PARTNERSHIP AND NOT ANY CONSIDERATION FOR TRANSFERRING ALL HIS INTEREST TO THE CONTINUING PARTNERS. IN THE CASE OF N.A. MODI VS. CIT (SUPRA), THE HONBLE JURISDICTIONAL HIGH COURT HAS FOLLOWED THE JUDGMENT IN THE CASE OF TRIBHUVANDAS G. PATEL ( SUPRA). AS WE HAVE ALREADY MENTIONED THAT THE JUDGMENT IN THE CASE OF TRIBHUVANDAS G. PATEL (SUPRA) WAS REVERSED BY THE HON'BLE SUPREME COURT. THEREFORE, FOLLOWING THE DECISION IN THE CASE OF N.A. MODI VS. CIT (SUPRA) WITHOUT CONSIDERING THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF TRIBHUVANDAS G. PATEL ( SUPRA) MADE OUT A CASE THAT THE COMMISSIONER HAS GUIDED HIMSELF BY A PARTICULAR DECISION AND NOT BY CONSIDERING THE OTHER RELEVANT DECISIONS ON THE POINT. FURTHER A SIMILAR ISSUE WAS CONSIDERED BY THE HON'BLE SUPREME COURT I N THE CASE OF CIT VS. R. LINGMALLU RAGHUKUMAR (247 ITR 801), WHEREIN, THE HONBLE APEX COURT HAS CONSIDERED THE EARLIER JUDGMENT AND HELD AS UNDER: - 'WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE EXCESS AMOUNT OF RS. 46,500 RECEIVED B Y THE ASSESSEE ON RETIREMENT FROM THE TWO PARTNERSHIP FIRMS IS ASSESSABLE TO CAPITAL GAINS ?' (P. 676) 2. THE HIGH COURT HAS HELD THAT THERE WAS NO TRANSFER OF ANY ASSETS AS CONTEMPLATED BY THE EXPRESSION TRANSFER AS DEFINED IN SECTION 2(47) OF THE INCOM E - TAX ACT, 1961. THE HIGH COURT HAD PLACED RELIANCE ON THE JUDGMENT OF THE GUJARAT HIGH COURT IN CIT V. MOHANBHAI PAMABHAI [1973] 91 ITR 393 , WHEREIN IT HAS BEEN HELD THAT WHERE A PARTNER RETIRES FROM A PARTNERSHIP AND THE AMOUNT OF HIS SHARE IN THE NET PARTNERSHIP ASSETS AFTER DEDUCTION OF LIABILITIES AND PRIOR CHARGES IS DETERMINED ON TAKING ACCOUNTS IN THE MANNER PRESCRIBED BY THE RELEVANT PROVISIONS OF THE PARTNERSHIP LAW, THERE IS NO ELEMENT OF TRANSFER OF INTEREST IN THE PARTNERSHIP ASSETS BY THE RETIRED ITA NO. 2353/MUM/2012 ASSESSMENT YEAR: - 2006 - 07 6 | P A G E PARTNER TO THE CONTINUING PARTNERS. THE SAID JUDGMENT OF THE GUJARAT HIGH COURT HAS BEEN AFFIRMED BY THIS COURT IN ADDL. CIT V.MOHANBHAI PAMABHAI [1987] 165 ITR 166 . IN VIEW OF THE SAID JUDGMENT, WE FIND NO MERIT IN THIS APPEAL AND THE SAME IS, THEREFORE, DISMISSED. NO ORDER AS TO COSTS. 16. THE QUESTION BEFORE THE HON'BLE SUPREME COURT WAS THAT THE EXCESS AMOUNT RECEIVED BY THE ASSESSEE ON RETIREMENT FROM TWO PARTNERSHIP FIRMS IS ASSESSABLE AS CAPITAL GAINS. THE JUDGMENT IN THE CASE OF ACIT VS. MOHANBHANI PAMABHAI (SUPRA) WAS REITERATED BY TH E HON'BLE SUPREME COURT. THE DECISIONS WHICH ARE RELIED UPON BY THE LD. COMMISSIONER ARE ALL BASED ON THE JUDGMENT OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF TRIBHUVANDAS G. PATEL ( SUPRA) WHICH WAS REVERSED BY THE HON'BLE SUPREME COURT. EVEN THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF PRASHANT S. JOSHI VS. ITO (SUPRA) BY FOLLOWING THE JUDGMENT IN THE CASE OF TRIBHUVANDAS G. PATEL ( SUPRA) HELD IN PARA 16 AS UNDER: - 16. AT THIS STAGE, IT MAY BE NOTED THAT IN CIT V. TRIBHUVANDAS G. PATE L [1978] 115 ITR 95 (BOM.), WHICH WAS DECIDED BY A DIVISION BENCH OF THIS COURT, UNDER A DEED OF PARTNERSHIP, THE ASSESSEE RETIRED FROM THE PARTNERSHIP FIRM AND WAS INTER ALIA PAID AN AMOUNT OF RS. 4,77,941 AS HIS SHARE IN THE REMAINING ASSETS OF THE FIRM. THE DIVISION BENCH OF THIS COURT HAD HELD THAT THE TRANSACTION WOULD HAVE TO BE REGARDED AS AMOUNTING TO A TRANSFER WITHIN THE MEANING OF SECTION 2(47) INASMUCH AS THE AS SESSEE HAD ASSIGNED, RELEASED AND RELINQUISHED HIS SHARE IN THE PARTNERSHIP AND ITS ASSETS IN FAVOUR OF THE CONTINUING PARTNERS. THIS PART OF THE JUDGMENT WAS REVERSED IN APPEAL BY THE SUPREME COURT INTRIBHUVANDAS G. PATEL V. CIT [1999] 236 ITR 515 . FOLLOWING THE JUDGMENT OF THE SUPREME COURT IN SUNIL SIDDHARTHBHAIS CASE (SUPRA), THE SUPREME COURT HELD THAT EVEN WHEN A PARTNER RETIRES AND SOME AMOUNT IS PAID TO HIM TOWARDS HIS SHARE IN THE ASSETS, IT SHOULD BE TREATED AS FALLING UNDER CLAUSE (II) OF SECTION 47. THEREFORE, THE QUESTION WAS ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. SECTION 47(II) WHICH HELD THE FIELD AT THE MATERIAL TIME PROVIDED THAT NOTHIN G CONTAINED IN SECTION 45 WAS APPLICABLE TO CERTAIN TRANSACTIONS SPECIFIED THEREIN AND ONE OF THE TRANSACTIONS SPECIFIED IN CLAUSE (II) WAS DISTRIBUTION OF THE CAPITAL ASSETS ON A DISSOLUTION OF A FIRM. SECTION 47(II) WAS SUBSEQUENTLY OMITTED BY THE FINANC E ACT OF 1987 WITH EFFECT FROM 1 - 4 - 1988. SIMULTANEOUSLY, SUB - SECTION (4) OF SECTION 45 CAME TO BE INSERTED BY THE SAME FINANCE ACT. SUB - SECTION (4) OF SECTION 45 PROVIDES THAT PROFITS OR GAINS ARISING FROM THE TRANSFER OF A CAPITAL ASSET BY WAY OF DISTRIBU TION OF CAPITAL ASSETS ON THE DISSOLUTION OF A FIRM OR OTHER ASSOCIATION OF PERSONS OR BODY OF INDIVIDUALS (NOT BEING A COMPANY OR A CO - OPERATIVE SOCIETY) OR OTHERWISE, SHALL BE CHARGEABLE TO TAX AS THE INCOME OF THE FIRM, ASSOCIATION OR BODY, OF THE PREVI OUS YEAR IN WHICH THE SAID TRANSFER TAKES PLACE. THE FAIR MARKET VALUE OF THE ASSETS ON THE DATE ITA NO. 2353/MUM/2012 ASSESSMENT YEAR: - 2006 - 07 7 | P A G E OF SUCH TRANSFER SHALL BE DEEMED TO BE THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER FOR THE PURPOSE OF SECTION 48. EX F ACIE SUB - SECTION (4) OF SECTION 45 DEALS WITH A SITUATION WHERE THERE IS A TRANSFER OF A CAPITAL ASSET BY WAY OF A DISTRIBUTION OF CAPITAL ASSETS ON THE DISSOLUTION OF A FIRM OR OTHERWISE. EVIDENTLY, ON THE ADMITTED POSITION BEFORE THE COURT, THERE IS NO TRANSFER OF A CAPITAL ASSET BY WAY OF A DISTRIBUTION OF THE CAPITAL ASSETS, ON A DISSOLUTION OF THE FIRM OR OTHERWISE IN THE FACTS OF THIS CASE. WHAT IS TO BE NOTED IS THAT EVEN IN A SITUATION WHERE SUB - SECTION (4) OF SECTION 45 APPLIES, PROFITS OR GAINS A RISING FROM THE TRANSFER ARE CHARGEABLE TO TAX AS INCOME OF THE FIRM. 17. THOUGH THE ISSUE BEFORE THE HON'BLE JURISDICTIONAL HIGH COURT WAS THE VALIDITY OF REOPENING, HOWEVER, THE REOPENING WAS ON THE ISSUE OF EXCESS AMOUNT RECEIVED BY THE RETIRING PERSO NS FROM THE PARTNERSHIP FIRM. THE HON'BLE HIGH COURT HAS GIVEN THE FINDING THAT IN CASE OF TRANSFER OF A CAPITAL ASSET BY WAY OF DISTRIBUTION OF CAPITAL ON DISSOLUTION OF FIRM OR OTHERWISE, DEALT WITH BY SECTION 45(4) AND, THEREFORE, THERE IS NO TRANSFER OF CAPITAL ASSET BY WAY OF DISTRIBUTION OF CAPITAL ASSET ON DISSOLUTION OF FIRM OR OTHERWISE. THE PUNE BENCHES OF THIS TRIBUNAL IN THE CASE OF REYAZ SHAIKH VS. ITO (SUPRA) HAS TAKEN A VIEW THAT THE AMOUNTS RECEIVED BY THE PARTNER ON HIS RETIREMENT ARE EXEM PT FROM CAPITAL GAIN TAX. THE TRIBUNAL IN THE SAID CASE AFTER DISCUSSING THE VARIOUS JUDGMENTS ON THE POINT HELD IN PARA 8 AS UNDER: - 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW. AS NOTED EARLIER, THE SHORT POINT INVOLVED IN THIS APPEAL RELATES TO TAXABILITY OF AMOUNT RECELVED BY THE ASSESSEEE ON RETIREMENT FROM PARTNERSHIP FIRM. THE HON'BLE SUPREME COURT IN THE CASE OF MOHANBHAI PAMABHAI (SUPRA) FOLLOWING ITS JUDGMENT IN THE CASE OF SUNIL SIDDHARTHBHAI VS. CIT 156 ITR 509 (SC) HELD THAT WHEN A PARTNER RETIRED FROM THE FIRM AND RECEIVED HIS SHARE OF AN AMOUNT CALCULATED ON THE VAL UE OF THE NET PARTNERSHIP ASSETS INCLUDING GOODWILL OF THE FIRM, THERE IS NO TRANSFER OF INTEREST OF THE PARTNER IN THE GOODWILL, AND NO PART OF THE AMOUNT RECEIVED IS ASSESSABLE AS CAPITAL GAIN U/S 45 OF THE ACT. THE JUDGMENT OF THE HON'BLE GUJARAT HIGH C OURT ITR 801(SC), THE SUPREME COURT HELD, WHILE AFFIRMING THE PRINCIPLE LAID DOWN IN THE CASE OF MOHANBHAI PAMABHAI (SUPRA) THAT WHEN A PARTNER RETIRES FROM THE PARTNERSHIP FIRM AND THE AMOUNT OF HRS SHARE IN NET PARTNERSHIP ASSETS AFTER DEDUCTION OF LIABI LITIES IS DETERMINED, THERE IS NO ELEMENT OF TRANSFER OF INTEREST IN THE PARTNERSHIP ASSETS BY THE RETIRED PARTNER TO THE CONTINUING PARTNERS AND THE AMOUNT RECEIVED BY THE RETIRING PARTNER IS NOT 'CAPITAL GAIN' UNDER SECTION 4S OF THE ACT. FURTHER, THE LE ARNED COUNSEL FOR THE APPELLANT HAS CORRECTLY POINTED OUT THAT THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN TRIBHUVANDAS G.PATEL (SUPRA) FOLLOWED IN THE CASE OF N.A. MODY (SUPRA) HAS BEEN REVERSED BY THE HON'BLE SUPREME COURT IN THE CASE OF TRIBHUVANDA S G.PATEL REPORTED IN 236 ITR 515 (SC) ON THIS ASPECT OF THE MATTER. IN FACT, THE HON'BLE BOMBAY HIGH COURT IN A RECENT DECISION IN THE CASE OF PRASHANT S. JOSHI ( ITA NO. 2353/MUM/2012 ASSESSMENT YEAR: - 2006 - 07 8 | P A G E SUPRA) HAS NOTED THE AFORESAID LEGAL POSITION. IN THIS CIRCUMSTANCES THE RELIANCE PLACED BY THE AUTHORITIES BELOW ON THE JUDGMENT OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF N.A.MODY (SUPRA) TO DECIDE THE CONTROVERSY AGAINST THE ASSESSEE, CANNOT BE UPHELD. INFACT, THE JUDGMENT OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF PRASHANT S. JOSHI (SUPRA) HAS ALSO NOTED THE OMISSION OF SECTION 47(II) OF THE ACT AND INSERTION OF SECTION 4S( 4) OF THE ACT WITH EFFECT FROM 1.4.1988. CONSIDERING THE ENTIRETY OF THE LEGAL POSITION, IT HAS BEEN AFFIRMED BY THE HON'BLE HIGH COURT THAT AMOUNTS RECEIVED BY T HE PARTNER ON HIS RETIREMENT, ARE EXEMPT FROM CAPITAL GAINS TAX. IN THIS VIEW OF THE MATTER, WE FIND IT APPROPRIATE TO ALLOW THE CLAIM OF THE ASSESSEE AND ACCORDINGLY THE ORDER OF THE CIT(A) IS SET ASIDE. THE ASSESSING OFFICER IS DIRECTED TO DELETE THE IMP UGNED ADDITION. THUS, IN GROUND NOS. 2. & 3, ASSESSEE SUCCEEDS AS ABOVE. 18. THUS IT IS CLEAR THAT THE TRIBUNAL HAS TAKEN A VIEW WHICH IS BASED ON THE SUBSEQUENT DECISION OF HON'BLE SUPREME COURT AS WELL AS HON'BLE HIGH COURT AFTER CONSIDERING THE JUDGME NT IN THE CASE OF N.A. MODI (SUPRA). A SIMILAR VIEW HAS BEEN TAKEN BY THE HYDERABAD BENCHES OF THIS TRIBUNAL IN THE CASE OF ACIT VS. S.N. PRASAD VIDE ORDER DATED 27.01.2014 IN ITA NO, 1200/HYD/2010. EVEN IN THE CASE OF SUDHAKAR M. SHETTY (SUPRA), THE TRIB UNAL HAS TAKEN NOTE OF THE DICHOTOMY/DIVERSE VIEW ON THE QUESTION AS TO WHETHER THERE IS ANY TRANSFER AT ALL IN SUCH SITUATION BY THE FIRM IN FAVOUR OF THE RETIRING PARTNER OR BY THE RETIRING PARTNER IN FAVOUR OF THE FIRM OR IN FAVOUR OF ITS CONTINUING PAR TNERS. 7. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS THE DECISIONS RELIED UPON BY THE ASSESSEE, WE HOLD THAT THE AMOUNT IN QUESTION RECEIVED BY THE ASSESSEE ON DISSOLUTION OF THE FIRM IS NOT TAXABLE IN THE HANDS OF THE ASSESSEE, ACCORDINGLY, WE DELETE THE XZ ADDITION MADE BY ASSESSING OFFICER. 8 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUCNED IN THE OPEN COURT ON THIS 18 TH DAY OF MARCH 2015 VKNS'K DH ?KKS'K.KK [KQYS U;K;KY; ES FNUKAD 18 EKPZ 2015 DKS DH XBZA SD/ - SD/ - ( RAJENDRA ) (VIJAY PAL RAO) ( ACCOUNTANT MEMBER / YS[KK LNL; ) (JUDICIAL MEMBER/ U;KF;D LNL; ) MUMBAI DATED 18 .03.2015 SKS SR. P.S, ITA NO. 2353/MUM/2012 ASSESSMENT YEAR: - 2006 - 07 9 | P A G E COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR, C BENCH, ITAT, MUMBAI BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI