ITO- 19(2)-3, MUMBAI V. M/S. KAMAKSHI LAND DEVELOPERS & ASSOCIATES, MUMBAI

ITA 6722/MUM/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 2290 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-04-2010
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 19-04-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 21-11-2008
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SANDEEP DAHIYA
• Keywords: Business expenditure; Revenue expenditure; Capital expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI. BEFORE SHRI R.V.EASWAR, SR.VP AND SHRI J.SUDHAKAR R EDDY,AM I.T.A. NO.6722/MUM/2008 (ASSESSMENT YEAR: 2005-06) THE INCOME TAX OFFICER, WARD-19(2)(3), PIRAMAL CHAMBERS, PAREL MUMBAI. VS. KAMAKSHI LAND DEVELOPERS & ASSOCIATES, 602, MORNING GLORY, THAKKAR PARK, AARAM SOCIETY ROAD, SANTACRUZ(E), MUMBAI-400 055. PAN:AACFK8616Q (APPELLANT) (RESPONDENT) APPELLANT BY : MR. SANDEEP DAHIYA, DR RESPONDENT BY : MR.TARUN GHIA O R D E R PER R.V.EASWAR, SENIOR VICE PRESIDENT: THIS IS AN APPEAL FILED BY THE REVENUE. IT RELATES TO THE ASSESSMENT YEAR 2005-06. 2. THE APPEAL ARISES THIS WAY. THE ASSESSEE IS A PA RTNERSHIP FIRM ENGAGED IN THE BUSINESS OF DEVELOPMENT OF BUIL DINGS. IT HAD UNDERTAKEN A PROJECT FOR REDEVELOPING A BUILDING CO NSISTING OF 23 FLATS IN PLOT NO.10, HANUMAN ROAD, VILE PARLE(E), M UMBAI. THE FIRM CONSISTED OF THREE PARTNERS NAMELY 1) MR. RATN AKAR CHANDRAKANT SALKAR, 2) MR. DATTARAM SHRIDHAR BHOSAL E & 3) MR. PRASHANT SHAMRAO JOSHI. BY A DEED OF ADMISSION CUM RETIREMENT CUM RECONSTITUTION ENTERED INTO ON 11 TH MARCH, 2005, MR.DATTARAM SHRIDHAR BHOSALE AND MR. PRASHAN T SHAMRAO JOSHI RETIRED FROM THE PARTNERSHIP AND MRS. MEHER RATNAKAR SALKAR WAS TAKEN IN AS A PARTNER. BEFORE R ETIREMENT, OUTGOING PARTNERS HAD 25% SHARE IN THE PROFITS AND LOSSES AND THE BALANCE 50% WAS THE SHARE OF MR. RATNAKAR CHAND RAKANT SALKAR. AFTER THE RECONSTITUTION OF THE FIRM, MR. R ATNAKAR C.SALKAR CONTINUED TO ENJOY 50% SHARE IN THE FIRM AND THE ITA NO.6722/M/08 2 INCOMING PARTNER MRS. MEHER RATNAKAR SALKAR WAS GIV EN 50% SHARE IN THE PROFITS AND LOSSES. IT WAS AGREED THAT THE ACCOUNTS OF THE PARTNERSHIP FIRM AS ON 8 TH MARCH, 2005 WAS ACCEPTABLE TO ALL THE PARTIES TO THE RECONSTITUTION AND ALL THE S TOCK-IN-TRADE, FURNITURE AND OTHER ASSETS OF THE PARTNERSHIP FIRM SHALL CONTINUE TO BELONG TO MR.RATNAKAR C.SALKAR AND MRS .MEHER R.SALKAR. THIS WAS PROVIDED IN CLAUSE 2 OF THE DEED OF RECONSTITUTION. THERE WAS TO BE NO CHANGE IN THE NA ME AND STYLE OF THE BUSINESS. THE RETIRING PARTNERS WERE FREE T O CARRY ON THE REAL ESTATE BUSINESS AS BUILDERS AND DEVELOPERS AND WERE ALSO ENTITLED TO USE THE WORD KAMAKSHI IN CONJUNCTION WITH ANY OTHER WORD OR WORDS EXCEPT THOSE USED BY THE ASSESS EE FIRM (CLAUSE 14). IN CLAUSE 17, IT WAS PROVIDED THAT THE CONTINUING AND INCOMING PARTNERS WERE ALONE ENTITLED TO THE PR OFIT OF THE VILE PARLE PROJECT AND THAT THE RETIRING PARTNERS S HALL HAVE NO CLAIM. SIMILARLY THE LOSSES WERE ALSO TO BE SUFFERE D ONLY BY THE CONTINUING PARTNERS. 3. CLAUSE 18 IS RELEVANT TO THE PRESENT CONTROVERSY . IT PROVIDED THAT SINCE THE CONTINUING AND INCOMING PAR TNERS TOOK OVER ALL THE LIABILITIES OF THE FIRM VIS-A-VIS THE VILE PARLE PROJECT, THE RETIRING PARTNERS WERE TO BE PAID A SUM OF RS.5 0 LAKHS EACH, AGGREGATING TO RS.1 CRORE, OVER AND ABOVE THE BALAN CE LYING TO THEIR CREDIT IN THEIR CAPITAL AND CURRENT ACCOUNT WITH THE PARTNERSHIP FIRM ON 8.3.2005 AND THE AFORESAID PAYM ENT WAS TOWARDS THEIR FULL, FINAL AND COMPLETE SETTLEMENT O F THEIR RESPECTIVE CREDIT BALANCES IN THE PARTNERSHIP FIRM IN LIEU OF THEIR RETIREMENT FROM THE FIRM AND FOR AGREEING NOT TO CL AIM ANY PROFIT OR RIGHT OVER THE VILE PARLE PROJECT. CLAUSE 19 PRO VIDED FOR PAYMENT OF THE AFORESAID SUM IN INSTALLMENTS. THE O THER CLAUSES OF THE DOCUMENT ARE NOT RELEVANT FOR OUR PURPOSE. ITA NO.6722/M/08 3 4. IN ACCORDANCE WITH THE AFORESAID ARRANGEMENT, TH E ASSESSEE FIRM PAID RS.1 CRORE TO THE RETIRING PARTN ERS AND THE AMOUNT WAS DEBITED TO THE PROFIT AND LOSS ACCOUNT F OR THE YEAR ENDED 31.03.2005 AS COMPENSATION FOR LEAVING FROM THE PROJECT. THE ASSESSING OFFICER, WHILE EXAMINING TH E ASSESSEES RETURN, HELD THAT THE COMPENSATION PAID TO THE RETI RING PARTNERS REPRESENTED CAPITAL EXPENDITURE NOT ALLOWABLE WHILE COMPUTING THE PROFITS OF THE BUSINESS. THE ASSESSEE BY LETTER DATED 6.11.2007 SEEMS TO HAVE STATED THAT THE AMOUNTS WER E PAID TO THE RETIRING PARTNERS ON ACCOUNT OF SHARP DIFFERENC ES AMONGST THE PARTNERS, WHICH DID NOT ALLOW THE PROJECT TO PR OGRESS AND THERE WAS APPREHENSION THAT THERE WOULD BE LEGAL CO NSEQUENCES AND FINANCIAL LOSSES. IT WAS CLAIMED THAT IN ORDER TO AVOID THEM, TWO PARTNERS WENT OUT OF THE FIRM AND THE LUMP SUM PAYMENT WAS MADE TO ENSURE SMOOTH PROGRESS OF THE PROJECT. THE ASSESSING OFFICER TOOK THE VIEW THAT THE BENEFIT WH ICH THE ASSESSEE DERIVED BY MAKING THE AFORESAID PAYMENT TO THE RETIRING PARTNERS WAS LONG LASTING AND THEREFORE TH E AMOUNT WAS NOT ALLOWABLE AS REVENUE EXPENDITURE. HE DISALLOWED THE SAME. 5. ON APPEAL, THE CIT(A) TOOK THE VIEW THAT THE ASS ESSING OFFICER NOT HAVING QUESTIONED THE FACTUAL ISSUE THA T THERE WAS DEADLOCK DUE TO DISAGREEMENT BETWEEN THE PARTNERS, OUGHT TO HAVE ALLOWED THE PAYMENT AS REVENUE EXPENDITURE. H E TOOK THE VIEW THAT THERE WAS NO ENDURING OR EVERLASTING BENE FIT TO THE ASSESSEE ON ACCOUNT OF THE PAYMENT AND THAT ADVANTA GE WAS ONLY IN THE REVENUE FIELD. ACCORDING TO HIM, THE PA YMENT WAS MADE ONLY TO ENABLE THE MANAGEMENT AND CONDUCT OF T HE ASSESSEES BUSINESS MORE EFFICIENTLY AND TO FACILI TATE THE TIMELY COMPLETION OF THE REDEVELOPMENT PROJECT IN THE VILE PARLE. HE ACCORDINGLY DELETED THE DISALLOWANCE. IN SUPPORT OF HIS CONCLUSION, HE HAS CITED CERTAIN AUTHORITIES. ITA NO.6722/M/08 4 6. THE REVENUE IS IN APPEAL TO CONTEND THAT THERE W AS NO EVIDENCE OF ANY DISAGREEMENT OR DISPUTES BETWEEN TH E PARTNERS AND THEREFORE THE CIT(A) WAS NOT JUSTIFIED IN HOLDI NG THAT THE EXPENDITURE WAS INCURRED TO ENSURE THE SMOOTH CONDU CT OF THE DAY-TO-DAY BUSINESS OF THE ASSESSEE. IT IS ALSO CON TENDED THAT THERE IS NO SUCH AVERMENT IN THE RECONSTITUTION DEE D AND FURTHER THERE WAS NO REVALUATION OF THE ASSETS OR L IABILITIES OF THE FIRM AT THE TIME OF THE RETIREMENT AND IT MAY VERY WELL BE THAT THE PAYMENT REPRESENTED THE FINAL SETTLEMENT OF ACC OUNTS OF THE RETIRING PARTNERS. IN OTHER WORDS, THE ARGUMENT OF THE REVENUE WAS THAT THE PAYMENT WOULD ONLY REPRESENT THE SHARE OF THE RETIRING PARTNERS IN THE NET ASSETS OF THE FIRM AND THE PAYMENT OF THE SAME TO THEM CAN NEVER BE CONSIDERED AS REVE NUE EXPENDITURE. 7. ON THE OTHER HAND, THE LEARNED REPRESENTATIVE FO R THE ASSESSEE CONTENDED THAT THE AMOUNT WAS PAID TO THE RETIRING PARTNERS OVER AND ABOVE THE BALANCES STANDING TO TH E CREDIT OF THE ACCOUNTS IN THE FIRMS BOOKS AND THEREFORE DID NOT REPRESENT THE SHARE OF THE RETIRING PARTNERS IN THE NET ASSET S OF THE FIRM. HE SUBMITTED THAT EVIDENCE WAS LED BEFORE THE ASSE SSING OFFICER IN SUPPORT OF THE CLAIM THAT THERE WERE DISPUTES BE TWEEN THE PARTNERS AND THIS TOOK THE FORM OF STATEMENTS FROM THE BANK ACCOUNT WHICH SHOWED NO OPERATION OF THE ACCOUNT WH ICH WAS ONLY DUE TO THE DISPUTES. IT WAS ARGUED THAT THE BU SINESS REALITIES HAVE TO BE TAKEN INTO CONSIDERATION AND T HAT ALL THE AUTHORITIES CITED IN THE ORDER OF THE CIT(A) FULLY SUPPORTED THE ASSESSEES CLAIM. RELIANCE WAS ALSO PLACED ON THE O BSERVATIONS OF THE CIT(A) IN PARA 3.4 OF HIS ORDER WHEREIN THE ASSESSEE HAD CLAIMED THAT DISAGREEMENTS BETWEEN THE PARTNERS LED TO DELAY IN THE COMPLETION OF THE PROJECT AND TIMELY COMPLETION WAS NECESSARY TO EARN GOODWILL IN THE BUSINESS. IN THIS PARAGRAPH THERE WAS ALSO REFERENCE TO ASSESSEES CLAIM THAT T HIS WAS THE ITA NO.6722/M/08 5 ONLY PROJECT UNDERTAKEN BY THE FIRM AND THEREFORE I T WAS ALL THE MORE IMPORTANT THAT THE RETIRING PARTNERS WERE PAID HEFTY COMPENSATION SO THAT THEY WOULD CEASE TO GIVE FURTH ER TROUBLE TO THE BUSINESS AND HAD THERE BEEN OTHER PROJECTS ON H AND, THE CONTINUING PARTNERS WOULD NOT HAVE BOTHERED MUCH AB OUT THE NEED TO PAY SUCH COMPENSATION. STRONG RELIANCE WAS PLACED ON SEVERAL AUTHORITIES WHICH WERE ALL FILED IN THE FOR M OF A PAPER BOOK. AT OUR INSTANCE, THE COPIES OF THE PROFIT AN D LOSS ACCOUNT AND BALANCE SHEET AS ON 31.03.2005 WERE ALSO FILED . 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIO NS BUT WE FIND THAT THE ORDER OF THE CIT(A) CANNOT BE UPHELD. IT SEEMS TO US THAT IT IS ONLY A CASE OF RETIRING PARTNERS TAKI NG THEIR SHARE IN THE NET ASSETS OF THE FIRM AND PAYMENTS TO THE RETI RING PARTNERS ON SETTLEMENT OF THE ACCOUNTS CANNOT BE CLAIMED AS BUSINESS EXPENDITURE OR REVENUE EXPENDITURE. THERE IS NO E VIDENCE BROUGHT ON RECORD BY THE ASSESSEE TO SHOW THAT THER E WERE SERIOUS DIFFERENCES BETWEEN THE THREE PARTNERS ON A CCOUNT OF WHICH THE COMPLETION OF THE VILE PARLE PROJECT WAS GETTING DELAYED AND THAT THEY HAD AGREED TO WALK OUT OF T HE FIRM AFTER TAKING THE AMOUNT OF RS.50 LAKHS EACH WITH AN ASSU RANCE THAT THERE WILL BE NO FURTHER TROUBLE CAUSED BY THEM. T HE DEED OF RECONSTITUTION DATED 11 TH MARCH, 2005, WHICH IS A CONTEMPORANEOUS DOCUMENT CONTAINS NO AVERMENT TO TH AT EFFECT AND THERE IS NO REFERENCE IN ANY OF THE CLAUSES, PA RTICULARLY CLAUSE 18, THAT THE TWO PARTNERS WERE RETIRING ON A CCOUNT OF DIFFERENCES OF OPINION WITH THE CONTINUING PARTNER AND THAT THE PAYMENT WAS BEING RECEIVED BY THEM AS COMPENSATION FOR NOT CAUSING FURTHER TROUBLE TO THE BUSINESS. ON THE CON TRARY, IT IS STATED IN CLAUSE 18 THAT THE AMOUNT WAS BEING PAID TOWARDS THEIR FULL, FINAL AND COMPLETE SETTLEMENT OF THEIR CREDIT BALANCES IN THE BOOKS OF THE FIRM IN LIEU OF THEIR RETIREMEN T AND FOR AGREEING NOT TO CLAIM ANY PROFIT IN THE VILE PARLE PROJECT AFTER ITA NO.6722/M/08 6 RETIREMENT. THERE IS NO REFERENCE TO ANY DIFFERENC ES OF OPINION BETWEEN THE PARTNERS IN THIS CLAUSE. FURTHER THE AMOUNT WAS TO BE PAID OVER AND ABOVE THE BALANCE LYING TO THE CREDIT OF THE RETIRING PARTNERS IN THE ASSESSEES BOOKS. OBVIOUSL Y, THE VALUE OF THE UNFINISHED PROJECT IN WHICH THE RETIRING PARTN ERS ALSO HAD A SHARE WAS TO BE ASCERTAINED WITH REFERENCE TO MARKE T CONDITIONS AND IT WAS THE RETIRING PARTNERS SHARE IN THE MARKE T VALUE OF THE PROJECT THAT WAS BEING PAID BY THE ASSESSEE FIRM. IN OTHER WORDS, IT SEEMS TO US THAT THE AMOUNTS PAID TO THE RETIRING PARTNERS REPRESENTED THEIR SHARE IN THE MARKET VALU E OF THE NET ASSETS OF THE FIRM, TO WHICH THEY WERE LEGALLY ENTI TLED. IN ADDITION TO THE FACT THAT THERE IS NO REFERENCE IN THE DEED OF RECONSTITUTION TO ANY DIFFERENCES OF OPINION BETWEE N THE PARTNERS, WE ALSO FIND THAT IT WAS ONLY IN THE LETT ER DATED 6.11.2007 WRITTEN BY THE ASSESSEE TO THE ASSESSING OFFICER THAT FOR THE FIRST TIME A REFERENCE WAS MADE TO ALLEGED DIFFERENCES OF OPINION BETWEEN THE EXISTING PARTNERS ON ACCOUNT O F WHICH THE PAYMENT WAS SUPPOSED TO HAVE BEEN MADE. THIS IS MOR E THAN TWO YEARS FROM THE DATE OF THE RECONSTITUTION DEED. THE LETTER CONTAINS A MERE CLAIM WITHOUT ANY EVIDENCE BEING AD DUCED. OBVIOUSLY, THERE WOULD HAVE BEEN RELIABLE EVIDENCE SUCH AS CORRESPONDENCE BETWEEN THE PARTNERS, LEGAL NOTICES ETC. IN ORDER TO PROVE DISPUTES BETWEEN THEM. THE MERE FACT THAT EVIDENCE WAS LED TO SHOW THAT THERE WERE NO OPERATIONS IN TH E BANK ACCOUNT FOR SOME TIME BECAUSE SOME PARTNERS WERE UN WILLING TO SIGN CHEQUES, WITHOUT ANY FURTHER EVIDENCE THAT THE PARTNERS ACTUALLY REFUSED TO SIGN THE CHEQUES, CANNOT BE ACC EPTED AS PROOF OF DIFFERENCES BETWEEN THE PARTNERS. THERE I S ABSOLUTELY NO EVIDENCE ON THIS ASPECT AND THE CIT(A) WAS NOT J USTIFIED IN HIS CONCLUSION THAT THE PAYMENT TO THE RETIRING PAR TNERS WAS TO ENABLE THE MANAGEMENT AND CONDUCT OF THE BUSINESS M ORE EFFICIENTLY AND TO FACILITATE THE TIMELY COMPLETION OF THE PROJECT. HIS OBSERVATION IN PAGE 8 OF HIS ORDER THAT THE ASS ESSING OFFICER ITA NO.6722/M/08 7 HAS NOT QUESTIONED THE ASSESSEES CLAIM THAT THERE WERE DISAGREEMENTS BETWEEN THE PARTNERS IS NOT JUSTIFIED . THE ASSESSING OFFICER HAS NOT ACCEPTED THE ASSESSEES C LAIM. HIS OBSERVATION IN PAGE 4 OF THE ASSESSMENT ORDER IS ON LY ON THE HYPOTHESIS THAT EVEN IF THERE WERE DISPUTES BETWEEN THE PARTNERS, THE CONTINUING PARTNER WAS FREE TO TAKE PARTNERS OF HIS CHOICE WHICH MAY REDUCE THE LITIGATION. THIS O BSERVATION OF THE ASSESSING OFFICER CANNOT BE TAKEN AS ACCEPTANCE OF THE ASSESSEES CLAIM THAT THERE WERE ACTUALLY DISPUTES OR DISAGREEMENTS BETWEEN THE PARTNERS OF THE ASSESSEE FIRM. IN ANY CASE, THE CIT(A) HAD NO EVIDENCE BEFORE HIM FROM WH ICH HE WOULD HAVE COME TO THE CONCLUSION THAT THERE WERE D ISPUTES BETWEEN THE PARTNERS TO SETTLE WHICH THE AMOUNT OF RS.1 CRORE WAS PAID TO THE RETIRING PARTNERS. WE WERE NOT REF ERRED TO ANY EVIDENCE ON BEHALF OF THE ASSESSEE, EXCEPT THE NON- OPERATIVE BANK ACCOUNT, TO SHOW THAT THE RETIREMENT OF THE PA RTNERS WAS A RESULT OF DISAGREEMENT BETWEEN THE THREE PARTNERS O F THE ASSESSEE FIRM. 9. WE ARE ACCORDINGLY OF THE VIEW THAT THE ASSESSEE S CLAIM OUGHT NOT TO HAVE BEEN ACCEPTED BY THE CIT(A). THER E IS NO EVIDENCE TO SHOW THE EXISTENCE OF THE DISPUTES BETW EEN THE PARTNERS OR TO SHOW THAT THE AMOUNT OF RS.1 CRORE W AS PAID TO THE RETIRING PARTNERS SO AS TO GET RID OF THEM IN T HE INTEREST OF THE SMOOTH AND EFFICIENT FUNCTIONING OF THE BUSINES S OR THE SUCCESSFUL COMPLETION OF THE VILE PARLE PROJECT. ON THE CONTRARY, IT SEEMS TO US THAT THE AMOUNT WAS PAID ONLY AS PAR T OF THE FINAL SETTLEMENT OF THE ACCOUNTS BETWEEN THE CONTINUING A ND RETIRING PARTNERS AS AVERRED IN CLAUSE 18 OF THE RECONSTITUT ION DEED. PAYMENTS MADE AS PART OF THE SETTLEMENT OF ACCOUNTS BETWEEN THE PARTNERS HAVE NOTHING TO DO WITH THE CARRYING O N OF THE BUSINESS. SUCH PAYMENTS ARE NOT ALLOWABLE AS BUSINE SS EXPENDITURE. THE VARIOUS AUTHORITIES TO WHICH OUR ATTENTION HAS ITA NO.6722/M/08 8 BEEN DRAWN BY THE ASSESSEE HAVE BEEN PERUSED BY US AND WE FIND THAT NONE OF THEM IS RELEVANT TO THE PRESENT C ONTROVERSY. NONE OF THE CASES IS ONE WHERE DEDUCTION HAS BEEN A LLOWED FOR PAYMENTS MADE UNDER SETTLEMENT OF THE ACCOUNTS BETW EEN THE PARTNERS. FOR EXAMPLE, THE ORDER OF THE TRIBUNAL IN THE CASE OF RSM & CO. (ITA NO.3269/MUM/2007 DATED 12.10.2009) T HE AMOUNT WAS PAID TO THE RETIRING PARTNER NOT AS PART OF SETTLEMENT OF ACCOUNTS BUT IT WAS A CONTRACTUAL PAY MENT AS RETIREMENT BENEFIT TO ONE OF THE PARTNERS WHICH WA S HELD TO BE ALLOWABLE AS BUSINESS EXPENDITURE. IN THE CASE OF CIT VS. MONDOVI HOTEL P.LTD. & ANOTHER, (284 ITR 129) THE A MOUNT WAS PAYABLE TO THE RETIRING PARTNERS ANNUALLY AS A PERC ENTAGE OF THE NET PROFITS OF THE BUSINESS SUBJECT TO A MAXIMUM LI MIT. IT WAS FOUND THAT THE DISSOLUTION DEED SEPARATELY PROVIDED FOR PAYMENT OF THE SHARE OF THE RETIRING PARTNERS IN THE VALUE OF THE NET ASSETS OF THE FIRM AND THAT THE PAYMENT IN QUESTIO N WAS NOT RELATED TO OR TIED UP WITH ANY CONSIDERATION PAYABL E TO THE RETIRING PARTNERS FOR RETIRING FROM THE FIRM. IN CIT VS. NATWARLAL MOHANLAL & CO. (105 ITR 748), THE BOMBAY HIGH COURT WAS CONCERNED WITH THE QUESTION REGARDING ALLOWABILITY OF THE PAYMENT MADE BY THE FIRM TO THE WIFE OF A DECEASED PARTNER. THE DECEASED PARTNER HELD THE IMPORT QUOTA RIGHTS W HICH WERE USED BY THE BUSINESS. AFTER THE DEATH OF THE PARTNE R, HIS WIFE RELINQUISHED HER HUSBANDS SHARE IN THE RIGHTS TO T HE CONTINUING PARTNERS FOR A CONSIDERATION TO BE PAID OVER FIVE Y EARS ANNUALLY. THE BOMBAY HIGH COURT HELD THAT THIS AMOUNTED TO PA YMENT WHICH WOULD FACILITATE THE ACQUISITION OF STOCK-IN- TRADE AND HENCE ALLOWABLE. IT MAY BE SEEN THAT THESE ARE ALL THE CASES WHICH ARE FACTUALLY DIFFERENT FROM THE PRESENT CASE . THE SAME IS THE POSITION WITH REGARD TO THE OTHER JUDGEMENTS CI TED BY THE ASSESSEE, A GIST OF WHICH WAS ALSO FILED BEFORE US, APART FROM THE DECISIONS THEMSELVES. A CAREFUL PERUSAL OF THE AUTH ORITIES SHOW THAT IN NONE OF THE CASES WAS THE AMOUNT PAID BY TH E FIRM TO THE ITA NO.6722/M/08 9 RETIRING PARTNER IN FULL AND FINAL SETTLEMENT OF HI S SHARE IN THE NET ASSETS OF THE FIRM WAS CLAIMED, AND ALLOWED AS A DEDUCTION. WE ACCORDINGLY REVERSE THE DECISION OF THE CIT(A) O N THIS POINT AND RESTORE THE DISALLOWANCE OF RS.1 CRORE. THE AP PEAL OF THE DEPARTMENT IS ACCORDINGLY ALLOWED. ORDER PRONOUNCED ON THIS 21 ST DAY OF APRIL, 2010. SD/- (J.SUDHAKAR REDDY) SD/- ( R.V.EASWAR ) ACCOUNTANT MEMBER SENIOR VICE PRESIDENT MUMBAI, DATED 21 ST APRIL, 2010. SOMU COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-19, MUMBAI. 4. THE CIT(A)-XIX, MUMBAI 5. THE DR A BENCH /TRUE COPY/ BY ORDE R ASSTT. REGISTRAR, I.T.A.T, MUMBAI