2015 (5) TMI 479 - HC - Income Tax

Exemption under section 10(23C)(via) - whether the relinquishment of a right in the partnership firm, Bangalore Housing Development and Investment (Morzaria Housing Complex), by the assessee and the receipt of the consideration would not amount to a transfer and no capital gains tax is leviable and whether it is independent of exemption under section 10(23C)(via)? - Held that - This appeal is allowed in terms of the judgment dated April 1, 2013, passed in I. T. A. No. 1344 of 2006 (CIT v. Manipal Academy of Higher Education 2013 (10) TMI 161 - KARNATAKA HIGH COURT setting aside the order passed by the assessing authority, the Appellate Commissioner and Income-tax Appellate Tribunal respectively and the matter stands remitted back to the assessing authority. - Decided by way of remand.

Summary

Issues:
1. Correctness of the order confirming no capital gains tax on relinquishment of partnership firm rights.
2. Applicability of exemption under section 10(23C)(via) of the Act.

Analysis:
1. The main issue in this appeal was whether the relinquishment of a right in a partnership firm and the receipt of consideration amounting to Rs. 33,66,99,989 would attract capital gains tax. The appellate authorities had ruled that no tax was leviable. The court considered the arguments presented by both parties. The appellant's counsel referred to a previous judgment and requested the court to set aside the orders passed by the lower authorities for fresh consideration. The respondent's counsel agreed with this submission and requested the court to dispose of the appeal in line with the previous judgment, leaving all contentions open.

2. The court allowed the appeal, setting aside the orders of the assessing authority, the Appellate Commissioner, and the Income-tax Appellate Tribunal. The matter was remitted back to the assessing authority for fresh consideration in accordance with the previous judgment. The court clarified that other substantial questions of law raised in the appeal memorandum were left open for the assessing authority to address after providing an opportunity for both parties to be heard. All contentions raised by the parties were also left open for further consideration.