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TMI Blog2011 (5) TMI 278X X X X Extracts X X X X X X X X Extracts X X X X ..... and in cases falling under clauses (d) of the proviso, it is a discretionary payment, would not stamp the payment with the character of revenue - Held that: amount received will be treated as capital receipt - Appeal is dismissed - IT APPEAL NO. 2436 (MUM.) OF 2009 - - - Dated:- 27-5-2011 - R.S. SYAL, V. DURGA RAO, JJ. Shravan Kumar for the Appellant. A.T. Jain for the Respondent. ORDER V. Durga Rao, Judicial Member. This appeal raised by the Revenue is directed against the order dated 5-12-2008 passed by the CIT(A) for the assessment year 2005-06. 2. The only effective ground raised in this appeal is as under : "Whether on the facts and circumstances of the case and in law the CIT(A) is correct in treating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of Mrs. Jaya Bhaskaran's case (supra) were entirely different from the facts of the present case. It was noticed that in the case of Mrs. Jaya Bhaskaran (supra), the payment was made in lieu of exercise of right to nominate on the death of the partner, the eldest surviving child, whereas in the case of the assessee, it was an assurance to the partners in order to get their attention to the affairs of the firm by ensuring continuous support to their widows on their death for a period of 10 years. The Assessing Officer also considered Circular No. 573, dated 29-8-1990 relied by the assessee in support of her case but observed that the said Circular was not applicable to the assessee's case. Resultantly the amount received by the assessee wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pensation for services rendered by the assessee either individually or likely to be rendered in future. Thus, the payment in the hands of the recipient was held to be not bearing any revenue character. Accordingly he held that the payments received by the assessee was in the nature of capital and not assessable to tax and allowed the appeal of the assessee and deleted the addition made by the Assessing Officer. 5. Being aggrieved the Revenue carried the matter in appeal before the Tribunal. The learned Departmental Representative strongly supported the order passed by the Assessing Officer and submitted that the case relied upon by the assessee in Mrs. Jaya Bhaskaran's case (supra) was not applicable to facts of the present case. He argue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, the assessee has relied on the decision of Mrs. Jaya Bhaskaran's case (supra). According to the Assessing Officer the payment received by the assessee is revenue in nature because according to the partnership deed clause 9(1)(b), payment under this clause shall be for full and final settlement of Shri Mani Arjun Aiyer including the user of his share of goodwill, tenancy rights, capital assets and all his other claims in the firm in respect of his past connection with the firm. The learned CIT(A) considered the entire factual matrix of the case of Mrs. Jaya Bhaskaran (supra) and P.H. Divecha's case (supra) and held that the decision in the case of Mrs. Jaya Bhaskaran (supra) squarely applies to assessee's case and as such the payment rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the hands of the person who receives it though in trying to find out the quality of the receipt one may have to examine the motive out of which the payment was made .The periodicity of the payment does not make the payment a recurring income because periodicity may be the result of convenience and not necessarily the result of the establishment of a source expected to be productive over a certain period." 8. In the instant case it is quite manifest from the facts of the case that the payment made to the assessee did not relate to any business done by her for the firm. In the like manner it was not to compensate the assessee for any loss of profits suffered by her because of the firm. It was also not a compensation for any services ren ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pirit of the circular, that when any payment is made to the legal heir to support them in hardship and ensure livelihood, it cannot be taxed, coincides with the ratio of the aforenoted judgment in the case of P.H. Divecha (supra). In the case of Padmaraje R. Kadambande v. CIT [1992] 195 ITR 877/62 Taxman 456, the Hon'ble Supreme Court held as under : "In such of those cases falling under clause (d) of the proviso to section 15(1) of the 1955 Act, no statutory right is created. This is unlike those cases falling under clauses (i), (ii) and (iii) of sub-section (1) of section 15. The fact that the assessee has applied for a grant for maintenance nor again, the periodicity of payment, would be conclusive. Neither the nomenclature nor the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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