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2013 (12) TMI 248 - HC - Income TaxTransfer of goodwill - Capital gains - Held that - Following Supreme Court in the case of CIT V/s. R. Lingamallu Rajkumar 1997 (1) TMI 74 - SUPREME Court - Amounts received on retirement by a partner is not subject to capital gains tax - Decided against Revenue.
Issues:
1. Interpretation of tax law regarding the treatment of amounts received by a partner on retirement from a partnership firm. Analysis: In this case, the main issue pertains to the treatment of amounts received by a partner on retirement from a partnership firm in relation to capital gains tax. The revenue raised a question regarding the addition of a specific amount towards long-term capital gain on the transfer of goodwill. The Tribunal, in its order, relied on the decision in the matter of Prashant S. Joshi v. Income Tax Officer, where it was held that amounts received by a partner on retirement are exempt from capital gains tax. The revenue argued that a previous decision in the matter of N.A. Mody v. CIT was not considered in the Prashant S. Joshi case. However, the Tribunal pointed out that the decision in N.A. Mody was based on a decision that had been reversed by the Apex Court, indicating its lack of relevance in the present case. The Tribunal also referenced the decision in CIT v. Tribhuvandas G. Patel, which was later reversed by the Apex Court. The Tribunal noted that the Prashant S. Joshi case relied on the decision in Tribhuvandas G. Patel and further referenced a Supreme Court decision in CIT v. R. Lingamallu Rajkumar, which held that amounts received on retirement by a partner are not subject to capital gains tax. Given these precedents and the lack of substantial argument from the revenue, the court found no reason to entertain the proposed question of law. Conclusively, the appeal by the revenue for the assessment year 2002-03 was dismissed with no order as to costs. The judgment reaffirmed the exemption of amounts received by a partner on retirement from partnership firm from capital gains tax, aligning with established legal precedents and interpretations of tax law.
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