VANITA H. ALIMICHANDANI, MUMBAI V. ITO 22(3)(5), MUMBAI

ITA 5489/MUM/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9975 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-07-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2005-2006
• Appeal Filed On: 08-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B S BIST
• Assessee Lawyers: SUNIL K RAMANI
• Keywords: Capital asset; Opportunity of being heard; Question of law
• Section: 143(3); 54F; 32; 148; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH F MUMBAI BEFORE SHRI C.N. PRASAD (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 5489 / MUM/20 16 ASSESSMENT YEAR: 2005 - 06 MRS. VANITA H. ALIMCHANDANI VS. ITO 22(3)(5) PLOT NO. 118, RAMANI VILLA, 1 ST PIRAMAL CHAMBER ROAD, TPS IV, BANDRA (W) MUMBAI - 400012 MUMBAI 40005 0 PAN NO. AGYPA7278C (APPELLANT) (RESPONDENT) ASSESSEE BY : MR. MAYUR KISNADWALA & MR. SUNIL K. RAMANI , AR REVENUE BY: MR. B.S. BIST, DR DATE OF HEARING : 10/04 /2017 DATE OF PRONOUNCEMENT: 07/07/2017 ORDER PER N.K. PRADHAN, AM THIS IS AN APPEAL FILED BY THE ASSESSEE . THE RELEVANT ASSESSMENT YEAR IS 2005 - 06 . THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER (APPEALS) 34 , MUMBAI AND ARISES OUT OF ORDER U/S 143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961 (THE ACT ) . 2. THE GROUNDS OF APPEAL FILED BY THE ASSESSEE READ AS UNDER : I. THE LEARNED CIT(A) ERRED IN HOLDING THAT THE AMOUNT RECEIVED BY THE APPELLANT ON HER RETIREMENT FROM THE PARTNERSHIP FIRM IS TAXABLE IN HER HANDS. II. THE LEARNED CIT(A) ERRED IN NOT APPRECIATING THE FACT THAT APPELLANTS CASE IS SQUARELY COVERED BY MUMBAI ITATS DECISION IN ITA NO. 5489 /MUM/201 6 2 ITO VS. RAMESH SHAH 2 SOT 558 WHERE THE ASSETS OF THE FIRM HAD BEEN RE - VALUED AND THE PARTNERS SHARE IN THE INCREASED VALUE HAD BEEN CREDITED TO HIS ACCOUNT AND THE AMOUNT WAS WITHDRAWN BY THE SAID PARTNER AND IT WAS HELD NOT TAXABLE. III. WITHOUT PREJ UDICE WHEREAS THE LEARNED CIT(A) RELIED ON: (A) BHARAT GINNING & PRESSING FACTORY V S. ITO 32 T AXMA N N. C OM (AHD. ITAT) (B) CIT V S. A.N. NAIK ASSOCIATES & ANR 265 ITR 348 (BOM) HIGH COURT HOLDING THAT THE AMOUNT RECEIVED BY THE PARTNERS ON RECONSTITUTION OF THE F IRM WAS TAXABLE IN THE HANDS OF THE FIRMS, THE LEARNED CIT(A) ERRED IN NOT FOLLOWING THE SAID DECISION IN FULL BY HOLDING THAT IN THE RESENT CASE ALSO THE IMPUGNED AMOUNT SHOULD HAVE BEEN ADDED IN THE HANDS OF THE FIRM AND NOT IN THE HANDS OF APPELLANT PAR TNER. IV. THE LEARNED CIT(A) ERRED IN NOT GRANTING RELIEF U/S 54F ON THE INVESTMENT MADE IN TWO ADJACENT FLATS WITHIN SPECIFIED TIME. V. THE LEARNED CIT(A) ERRED IN STATING THAT APPELLANT WAS OWNING ALREADY A FLAT BEFORE CLAIMING DEDUCTION U/S 54F WHEREAS APPELLANT WAS NOT OWNING ANY SUCH FLAT. VI. IT IS PRAYED THAT THE AMOUNT RECEIVED ON RETIREMENT FROM THE FIRM BY THE APPELLANT MAY BE HELD AS NO TAXABLE. VII. WITHOUT PREJUDICE TO THAT, APPELLANT MAY BE GRANTED BEN E FIT OF DEDUCTION U/S 54F. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSES SEE WAS A PARTNER IN M/S B. ALIM BUILDERS. DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE RETIRE D FROM THE ABOVE FIRM AND RECEIVED A SUBSTANTIAL SUM OF MONEY. THE ASSESSEE DID NOT FILE THE RETURN OF INCOME BUT THE SAME WAS FILED IN RESPONSE TO NOTICE U/S 148 OF THE ACT. HOWEVER, THE ASSESSEE DID NOT OFFER ANY TAX ON THE INCOME DECLARE D . DURING THE ASSESSMENT PROCEEDINGS , IT WAS THE CONTENTION OF THE ASSESSEE THAT THE PROVISIONS OF SECTION 45(4) WERE NOT APPL ICABLE TO HER AND THEREFORE, NO TAX WAS PAID. THE ASSESSEE RELIED ON THE DECISION IN THE ITA NO. 5489 /MUM/201 6 3 CASE OF CIT VS. LINGMALLU RAGHUKUMAR R . (247 ITR 801) (SC). HOWEVER, THE AO DISTINGUISHED THE DECISION AND RELIED ON THE DECISION IN THE CASE OF ALA FIRM VS. CIT 189 I TR 285 (SC) AND HELD THAT THE ASSESSEE WAS LIABLE TO TAX U/S 45(4) WITH RESPECT TO RETIREMENT BENEFIT RECEIVED FROM THE FIRM. IN APPEAL, LD. CIT(A) UPHELD THE ORDER OF THE AO. IN FURTHER APPEAL THE ITAT RESTORED THE MATTER TO THE FILE OF THE LD. CIT(A) F OR FRESH ADJUDICATION ON BOTH THE ISSUES I.E. TAXABILITY OF RETIREMENT RECEIPTS AND DEDUCTION U/S 54F AFTER PROVIDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 4. THE BASIS FACTS ARE THAT IN THE INSTANT CASE, THE ASSESSEE HAD PURCHASED TWO ADJ ACENT FLATS NO. 503 AND 504 CONNECTED TO EACH OTHER AT IMPERIAL HEIGHTS, PALI HILL, BANDRA FROM LOKHANDWALA CONSTRUCTION INDUSTRIES PVT. LTD. THE TOTAL CONSIDERATION OF RS.2,03,87,140/ - WAS PAID FOR THESE FLATS ON 12.07.2004. THE ASSESSEE ALSO CLAIMED DEDU CTION U/S 54 OF THE ACT FOR THE AMOUNT OF RS.2,03,87,140/ - BY CLAIMING THAT BOTH THE FLATS BEING CONNECTED TO EACH OTHER FORM ED A SINGLE RESIDENTIAL UNIT. IN THIS REGARD THE LD. CIT(A) CALLED FOR A REMAND REPORT FROM THE AO. AFTER RECEIPT OF THE SAID REPORT, THE LD. CIT(A) SENT A COPY TO THE ASS ESSEE TO FILE HER REPLY, IF ANY. THE REPLY OF THE ASSESSEE TO THE REMAND REPORT READS AS UNDER: REF. ASSESSING OFF ICERS REMARKS COMMENTS PAGE 1 THE ASSESSEE WAS PARTNER IN A FIRM UPTO 30.06.2004. ASSETS OF THE FIRM WERE REVALUED AT RS.4.26 CRORES AGAINST THE BOOK VALUE OF RS.56.00 LAKHS AND AN AMOUNT OF RS.2,98 CRORES WAS CREDITED TO HER CAPITAL ACCOUNT. THE ASSESSEE RETIRED FROM THE FIRM AND WITHDREW HER SHARE OF CAPITAL WHICH INCLUDED REVALUATION AMOUNT THIS REPRESENTS FACTUAL POSITION. HOWEVER, IT MAY BE ADDED THAT HER SHARE IN REVALUED AMOUNT WAS CREDITED TO HER CAPITAL ACCOUNT IN AY 2004 - 05. THE ASSESSEE RETIRED FROM THE FIRM NEXT YEAR I.E. AY 2005 - 06 TAKING THE AMOUNT LYING IN ITA NO. 5489 /MUM/201 6 4 HER CAPITAL A/C. (A) NO CAPITAL GAIN ARISES ON REVALUATION OF ASSET. (B) NO CAPITAL GAIN ARISES WHEN A PARTNER GOES OUT TAKING THE AMOUNT LAYING IN CAPITAL A/C. A PAPER BOOK WHICH H AS BEEN SUBMITTED TO THE LD. CIT(A) CONTAINS THE RELEVANT CASE LAWS PAGE 2 (I) THE ASSESSING OFFICER SENT A QUERY AS TO WHY AMOUNT RECEIVED FROM FIRM SHOULD NOT BE TAXED. THE ASSESSEE SUBMITTED VARIOUS CASE LAWS HOLDING THAT NO TRANSFER OF ASSET IS INVOL VED. THE ASSESSING OFFICER REJECTED THE SAME AND MADE ADDITION OF RS.2,58,35,652/ - THE ASSESSING OFFICER HAS GIVEN FACTUAL POSITION. CASE LAWS HAVE BEEN SUBMITTED TO THE LD. CIT(A) HOLDING THAT SINCE THERE IS NO TRANSFER NO CAPITAL GAIN ARISES AND THE AMO UNT IS NOT TAXABLE. (II) CLAIM U/S 54F WAS NOT MADE BEFORE THE ASSESSING OFFICER AND ONLY BEFORE THE LD. CIT(A) AS ADDITIONAL GROUND. THE LD. CIT(A) REJECTED THE SAME ON THE GROUND THAT THE ASSESSEE OWNS ANOTHER PROPERTY SECTION 54F ALLOWS ONE EXISTING H OUSE TO BE OWNED BY THE ASSESSEE AND IT DOES NOT PERMIT HOLDING OF MORE THAN ONE RESIDENTIAL HOUSE AT IMPERIAL HEIGHTS WHICH WAS PURCHASED OUT OF PROCEEDS RECEIVED FROM THE PARTNERSHIP FIRM AND THIS HOUSE WAS GIVEN ON LEAVE AND LICENSE TO M S . SCHLUMBERGER WHICH INCOME WAS OFFERED FOR TAXATION. THE ASSESSEE USED TO LIVE WITH THE NIECE OF HER HUSBAND AT LAAJ APARTMENTS, NORTH AVENUE, SANTACRUZ WEST, MUMBAI 400054 AND THIS BY ITSELF DOES NOT MEAN THAT THE ASSESSEE OWNED ONE MORE RESIDENTIAL HOUSE. THE ASSESSEE IS INDULGING IN TAX AVOIDANCE AND NOT TAX PLANNING INVESTMENT OF SALE PROCEEDS IN NEW HOUSE IS PERMITTED IN SECTION 54F. IF AN ASSESSEE TAKES ADVANTAGE OF BENEFICIAL PROVISIONS, SO THAT TAX BURDEN IS REDUCED, IT IS ONLY TAX PLANNING AND NOT T AX AVOIDANCE. (III) THE ASSESSING OFFICER RECOMMENDS THAT THE ADDITIONAL GROUND REGARDING SECTION THE ASSESSING OFFICER IS IN ERROR IN MAKING THIS ITA NO. 5489 /MUM/201 6 5 54F BE REJECTED RECOMMENDATION. THE PREDECESSOR LD. CIT(A) HAD ALREADY ADMITTED THE GROUND THOUGH HE DID N OT ALLOW THE APPEAL. THE ITAT HAS ALSO TAKEN COGNIZANCE OF THE CLAIM OF THE ASSESSEE. 4.1. THE LD. CIT(A) AGREED WITH THE ORDER OF LD. CIT(A) - 30 DATED 19.03.2013 AND REJECTED THE ADDITIONAL GROUNDS OF APPEAL REGARDING THE CLAIM OF DEDUCTION U/S 54F OF T HE ACT. 5. BEFORE US, THE LD. COUNSEL OF THE ASSESSEE FILES A COPY OF THE DECISION IN THE CASE OF CIT VS. GITA DUGGAL 357 ITR 153 (DEL . ), CIT VS. SYED ALI ADIL 352 ITR 418 (AP), CIT VS. SMT. V.R. KARPAGAM 373 ITR 127 (MAD . ) AND DCIT VS. JAI TRI KANAND RAO 149 ITD 112 (MUMBAI), MRS. KAUSHALYA R. SAMPAT VS. ITO (ITA NO. 3609/MUM/2013) ITAT A BENCH MUMBAI, RAMESH BUILDERS (INDIA) VS. ITO ITA NO. 1797/MUM/2012 ITAT D BENCH MUMBAI , SHRI ANAND B. TAWADE VS. ITO - ITA NO. 6362/MUM/2012 ITAT A BENCH M UMBAI , A.L. A. FIRM VS. CIT - 189 ITR 285 (SC), BHARAT GINNING & PRESSING FACTORY VS. ITO - 32 T AXMANN.COM 322 (AHMEDABAD - TRIB.), ITO VS. RAMESH M. SHAH - 2 SOT 558 MUM, A.R. ASHER & ORS. VS. ITO ITA NO. 5256/M/2009, PURYANOR IND. VS. ACIT - 317 (AT) 56 - COCHI N , CIT VS. KUNNAMKULAM MILL BOARD - 257 ITR 544 (KER), PRASHANT JOSHI VS. ITO 324 ITR 154 BOM., ITO VS. PARU DAVE - 110 ITD 410 (MUM), ITO VS. RAJNISH BANDARI ITA NO. 469/PN/2011, CIT VS. RIYAZ A. SHAIKH ITA NO. 1969/11( BOM .) , CIT VS. DYNAMIC ENT - 223 TAXMAN 331 (KAR) - FB, RADHU PALACE VS. ADDL. CIT - 4 T AXMANN.COM 281 (DELHI TRIB.), TRIBHUVANDAS G. PATEL VS. CIT 236 ITR 515 (SC) , CIT VS. SHREYAS CHINABHAI 237 ITR 358 ( GUJ .) , CIT VS. BHARTKUAR PANCHAL 252 ITR 454 ITA NO. 5489 /MUM/201 6 6 ( GUJ .) , CIT VS. BALVANTRAI VITHALDAS SHAH - 196 ITR 379 ( GUJ .) , AND CIT VS. SMT. CHETANABAI SHETH - 203 ITR 24 ( GUJ .) . 6. ON THE OTHER HAND, THE LD. DR RELIES ON THE ORDER THE LD. CIT(A). 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. THE FACTS IN THE INSTAN T APPEAL ARE SUMMARIZED AS UNDER: THE ASSESSEE WAS A P ARTNER ALONG WITH THREE OTHERS IN A FIRM M/S B. ALIM BUILDERS FROM 16.11.1981. IN 1988, THE FIRM ACQUIRED A PROPERTY IN BANGALORE FOR RS. 45 LACS. ON 14.02.1995 IT ENTERED INTO JOINT DEVELOPMENT AGREE MENT WITH A DEVELOPER. THE CONSTRUCTION OF A BUILDING COMMENCED BUT COULD NOT BE COMPLETED EVEN TILL 2003 ON ACCOUNT OF DISPUTES WITH THE DEVELOPER. IT WAS DECIDED TO GET THE PROPERTY REVALUED TO SETTLE THE MATTER. THE REGISTERED VALUER VALUED THE PROPERTY AT RS.4.26 CRORE ON 23.04.2003 (A.Y. 2004 - 05) AGAINST THE BOOK VALUE OF RS.56 LACS. THE SHARE OF THE ASSESSEE ON ACCOUNT OF INCREASE DUE TO THE REVALUATION I.E. RS.2.98 CRORE WAS CREDITED TO HER ACCOUNT IN THE RATIO OF HER SHARE OF PROFIT @ 70% IN THE SAM E ASSESSMENT YEAR 2004 - 05. THE FIRM WAS RECONSTITUTED ON 10.05.2004 IN THE A.Y. 2005 - 06 WITH ADMISSION OF TWO NEW PARTNERS WHO INTRODUCED CAPITAL OF RS.2.25 CRORE EACH. THE ASSESSEE RETIRED FROM THE PARTNERSHIP IN JUNE, 2004 ( AY 2005 - 06) AND WITHDREW THE AMOUNT LYING IN HER CAPITAL ACCOUNT WHICH INCLUDED THE AMOUNT ON ACCOUNT OF REVALUATION. IT IS CLAIMED BY THE ASSESSEE DURING ASSESSMENT PROCEEDINGS THAT WHEN A PARTNER RETIRES FROM A FIRM TAKING AWAY THE AMOUNT OF ITA NO. 5489 /MUM/201 6 7 HER SHARE IN THE ASSETS OF THE FIRM AFTER DEDUCTION OF LIABILITY AND PRIOR CHARGES, THERE IS NO ELEMENT OF TRANSFER AND THE AMOUNT RECEIVED BY THE PARTNER IS NOT LIABLE TO C APITAL G AINS T AX. THE AO DID NOT ACCEPT THE CONTENTION AND TAXED THE ENTIRE AMOUNT. 7.1 WE BEGIN WITH THE DECISION IN RAMESH M. SHAH (SUPRA) . IN THAT CASE DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 1994 - 95, THE ASSESSEE RETIRED FROM THE FIRM. AFTER REVALUATION OF THE ASSETS OF THE FIRM, CERTAIN AMOUNT WAS CREDITED TO THE ASSESSEES CAPITAL AMOUNT AS HIS SHAR E OF REVALUATION SURPLUS. IT WAS STATED BEFORE THE AO THAT REVALUATION OF THE ASSETS BY THE FIRM WAS MERELY BY BOOK ENTRIES NOT INVOLVING ANY SALE OR TRANSFER OF ASSETS AND THAT PROPOSITION OF TAXING THAT SHARE WOULD AMOUNT TO TAXING NOTIONAL PROFIT. THAT WAS NOT ACCEPTABLE TO THE AO WHO HELD THAT THE ASSESSEES SHARE OF REVALUATION SURPLUS WAS FOR RELINQUISHING HIS INTEREST IN SHARE IN FAVOUR OF THE CONTINUING PARTNERS AND THAT THE TRANSACTION TANTAMOUNTED TO TRANSFER WITHIN THE MEANING OF SECTION 2 (47) A ND THE GAIN ARISING THEREFROM WAS TAXABLE AS CAPITAL GAINS. ON APPEAL, THE COMMISSIONER (APPEALS) DELETED THE ADDITION. THE TRIBUNAL HELD AS UNDER: IN THE DECISION IN CIT VS. L. LINGMALLU RAGHUKUMAR [2001] 247 ITR 801, THE SUPREME COURT HELD THAT WHEN A PARTNER RETIRES FROM A FIRM AND THE AMOUNT OF HIS SHARE IN THE PARTNERSHIP ASSETS AFTER DEDUCTION OF LIABILITIES AND PRIOR CHARGES IS DETERMINED ON TAKING ACCOUNTS IN THE MANNER PRESCRIBED BY THE PARTNERSHIP LAW, 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. IN VIEW OF THAT DECISION, THERE WAS NO SUBSTANCE IN THE APPEAL OF THE REVENUE AND ACCORDINGLY, THE SAME WAS TO BE DISMISSED. ITA NO. 5489 /MUM/201 6 8 7.2 WE NOW COME TO THE ORDER OF THE TRIBUNAL IN THE CASE OF SHRI ANAND B. TAWADE (SUPRA) . I N THAT CASE THE ASSESSEE WAS A PARTNER IN M/S GURUKRIPA REALTORS AND RETIRED FROM THE SAID PARTNERSHIP FIRM VIDE DEED OF RETIREMENT DATED 10.12.2007. DURING THE COURSE OF ASSESSMENT PROCEEDINGS IN THE CASE OF M/S OM GURUKRIPA REALTORS FOR AY 2008 - 09, IT WAS NOTICE D BY THE AO THAT THE SAID FIRM HAD PAID AN AMOUNT OF RS.75,53,858/ - TO THE ASSESSEE AS PAYMENT FOR GOODWILL ON RETIREMENT. THE ASS ESSEE SUBMITTED THAT THE SAME MUST NOT BE TREATED AS INCOME IN HIS HAND AS IT WAS NOT A RECEIPT LIABLE TO TAX AS THERE WAS NO ELEMENT OF TRANSFER INVOLVED IN THE SAME. IN THE TRANSACTION OF RETIREMENT OF A PARTNER, JUST AS IN THE CASE OF DISSOLUTION OF PAR TNERSHIP, THERE IS NO ELEMENT OF TRANSFER OF A CAPITAL ASSET, WHICH ATTRACTS THE PROVISIONS OF SECTION 45 AND 47(II) OF THE ACT. IT WAS SUBMITTED THAT THERE WAS NOT DISTRIBUTION OF ASSETS, BUT ONLY PAYMENT OF MONEY. THE AO BROUGHT TO TAX THE GOODWILL AMOUN T OF RS.75,53,858/ - RECEIVED BY THE ASSESSEE TREATING IT AS LONG TERM CAPITAL GAINS. IN APPEAL, THE LD. CIT(A) UPHELD THE ORDER OF THE AO. IN FURTHER APPEAL , THE TRIBUNAL RELYING ON THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF RIYAZ A. SHEI KH (SUPRA) AND THE ORDER OF THE CO - ORDINATE BENCH IN THE CASE OF SMT. HEMALATA S. SHETTY VS. ACIT IN ITA NO. 1514/MUM/2010 HELD THAT THE AFORESAID AMOUNT OF RS.75,53,858/ - RECEIVED BY THE ASSESSEE FROM THE PARTNERSHIP FIRM GURUKRIPA REALTORS ON RETIREMENT FROM THE SAID PARTNERSHIP FIRM WAS NOT TAXABLE IN THE HANDS OF THE PARTNER I.E. THE ASSESSEE. 7.3 WHETHER, SUCH SUM RECEIPT ON RETIREMENT IS TAXABLE OR NOT IS ANSWERED BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF RIYAZ A. SHEIKH (SUPRA) , WHEREIN CONSID ERING THE JUDGMENT IN PRASHANT S. JOSHI (SUPRA), HAS HELD AS UNDER: - ITA NO. 5489 /MUM/201 6 9 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 CI T VS. TRIBHUVANDAS G. PATEL REPORTED IN 115 ITR 95 AND THE SAME HAS BEEN REVERSED BY THE APEX COURT IN TRIBHUVANDAS G. PATEL VS. CIT REPORTED IN 263 ITR 515. THIS COURT IN THE MATTER OF PRASHANT S. JOSHI (SUPRA) HAS ALSO REFERRED TO THE DECISION OF TRIBHUV ANDAS 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 VS. R. LINGAMALLU RAJK UMAR 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. 7.4 THE FACTUAL SCENARIO IN THE PRESENT CASE HAS TO BE APPRECIATED ON THE TOUCHSTONE OF THE AFORESAID AUTHORITIES. IN VIEW OF THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF RIYAZ A. SHEIKH (SUPRA) AND THE DECISION OF THE CO - ORDINATE BENCH IN RAME SH M. SHAH (SUPRA) & ANAND B. TAWADE (SUPRA) , WE HOLD THAT THE AFORESAID AMOUN T OF RS.2,58,35,652/ - RECEIVED BY THE ASSESSEE FROM THE PARTNERSHIP FIRM ON RETIREMENT IS NOT TAXABLE IN THE HANDS OF THE PARTNER I.E. THE ASSESSEE. 7.5 AS WE HOLD THAT THE AFORE SAID AMOUNT OF RS.2,58,35,652/ - RECEIVED BY THE ASSESSEE FROM THE PARTNERSHIP FIRM IS NOT TAXABLE IN THE HANDS OF THE ASSESSEE, WE ARE NOT ADVERTING TO THE GROUNDS RELATING TO THE CLAIM OF RELIEF U/S 54F OF THE ACT. ITA NO. 5489 /MUM/201 6 10 8. IN THE RESULT, THE APPEAL IS ALLO WED. ORDER PRONOUNCED IN THE OPEN C OURT ON 07/07/2017. SD/ - SD/ - ( C.N. PRASAD ) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI : DATED: 07/07/2017 RAHUL SHARMA , SR. P.S. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE . BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI