9911796707
TMI Blog2014 (4) TMI 517X X X X Extracts X X X X X X X X Extracts X X X X ..... tails of deposit account kept by Assessee over period of time from 1999 to 2008 for by passing minimum Franchise payable to M/s. Hiralal Khodidas - It is fact that Assessee has debited sum of Rs. 6 lacs and Rs. 1 lac on 23.3.1999 and 31.3.2001 - If credit of these amounts is given by M/s. Hiralal Khodidas, there will be just negligible difference - In view of fact delete the addition – Decided in favour of Assessee. Addition made on account of unpaid sundry creditors - CIT(A) confirmed disallowance amounting to Rs.2,52,064/- Held that:- Assessee did not produce any evidence except relying on provisions of Sec. 41(1) that liability has not ceased and that until liability is not ceased, sum of Rs.2,52,064/- cannot be treated to be income of Assessee - Sum of Rs. 30 lacs included in Sundry Creditors as on 31.3.2009 has been paid by Assessee to M/s. Mayur Minerals - In view of this undisputed fact, confirm deletion of addition by CIT(A) to extent of Rs. 30 lacs - So far balance sum of Rs. 2,52,064/- is concerned, no evidence has been filed by Assessee whether these creditors still exist - Assessee has also not written off these creditors so that it may be treated as cessation of lia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pect of SFI unit as well as Greater Ferromet - Both AO as well as CIT(A) were not correct in appreciating facts of case and just allowing ground loss in respect of SFI unit at same percentage at which it has been incurred in respect of Greater Ferromet unit - Ground loss has to vary with distance - No allegation that Assessee has sold inventory of iron ore outside books of accounts - Set aside order of CIT(A) and delete addition made by AO – Decided in favour of Assessee. Deletion of addition on account of loss due to forward booking of US$ and by way of contribution for construction of Usgao bridge – Held that:- It is a social obligation demanded by the local community which cannot be overlooked by the assessee. - no material or evidence was brought to our knowledge which may prove that the project belonged to the Assessee and it represents capital expenditure incurred by the Assessee. – Decided against Revenue. Disallowance of expenses out of Community Development - CIT(A) deleted disallowance – Held that:- AO himself accepted, considering nature of business activity carried out by Assessee and obstacle from public, that incurrence of this expenditure cannot be ruled out b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which the assessee earned exemption dividend and (b) by excluding the bank charges and commission while considering the proportionate disallowance of interest under Rule 8D(2)(ii). 3. The CIT(A) erred in confirming the addition of Rs. 6,98,926/- made by the AO on account of difference in creditor account in spite of providing the reconciliation before the AO. 4. (i) The CIT(A) erred in confirming the disallowance amounting to Rs.2,52,064/- by holding that the assessee failed to provide the confirmation letter before the AO. (ii) The CIT(A) ought to have deleted the addition as there being no change in the opening and closing balances of these creditors during the year under appeal suggesting any income accrued to the assessee. 5. (i) The CIT(A) erred in confirming the addition amounting to Rs.15,10,000/- written off as bad debt by the assessee pertaining to one of it s ex-staff. (ii) The CIT(A) having in knowledge that the advance given to a staff which remained unrecovered by reason of his leaving the job, ought to have allowed the same as business loss under section 29 of the Act. 6. (i) The CIT(A) erred in confirming the addition in the sum of Rs.3,08,039/-. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amounting to Rs.30,00,000/-. 7. The Ld. CIT(A) erred in deleting the addition made by the AO on account of bad debts written off amounting to Rs.4,53,996/-. 2. Ground no. 1 in Assessee s appeal as well as Revenue s appeal are general in nature and therefore do not require any adjudication. 3. Ground no. 2 in Assessee s appeal relates to the sustenance of the disallowance u/s 14A r/w Rule 8D of the Income Tax Act. The brief facts relating to this ground are that the Assessee received Dividend income amounting to Rs.13,85,03,376/- being exempt under Income Tax Act. The Assessee claimed that he did not incur any expenditure in respect of the Dividend income. It is only the surplus funds which have been invested through the bankers to have good relation with the banks and financial institutions. The mutual fund officials used to come to the door step of the Assessee and fill up forms. The Assessee only issued the cheque. The AO did not agree and took the view that without analysing the nature of the investment and devoting time, the Assessee could not have made the investment in mutual funds. The AO took the view that the provisions of Sec. 14A were clearly applicable in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is income not forming part of the total income. Before making any disallowance the AO is required to record satisfaction having regard to the accounts of the Assessee that the claim of the Assessee that the expenditure incurred is not related to the income forming part of the total income is incorrect. Such satisfaction must be arrived at on objective basis. Once the satisfaction is made, only then, the applicability of Rule 8D will arise. It was also submitted that the expenditure which have to be disallowed under Rule 8D must have a proximate relationship with the earning of the Dividend income. For this also, reliance was placed on the decision of this Tribunal in the case of ACIT vs. Sesa Goa Ltd. (supra) dt. 8.3.2013 for which the undersigned is the author. It was also pointed out that the decision of Godrej Boyce Manufacturing Co. Ltd. vs. DCIT, 328 ITR 81 (Mum) (supra) has duly been discussed by this Bench in that case. It was submitted that there is no satisfaction whatsoever being recorded by the AO in accordance with Sec. 14A(2) and therefore it is a case where Rule 8D could have not been applied and there could not be any disallowance as per Sec. 14A(2). 3.3 The ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T Act read with Rule 8D of the IT Rules. Sec.14A was inserted by the Finance Act, 2001 w.e.f. 1.4.1962. Originally this sec. provides that in computing the total income of the assessee no deduction shall be allowed in respect of the expenditure incurred by the assessee in relation to the income which does not form part of the total income under the Act. Subsequently, by Finance Act, 2002 with retrospective effect from 11/5/2001 proviso was added which states that this sec. shall not empower the AO either to re-assess or pass an order enhancing the assessment or reducing the refund already made or otherwise increasing the liability of the assessee for any assessment year beginning on or before 1/4/2001. With effect from 1/4/2007 by Finance Act, 2006 sub-sec. (2) empowers the AO to determine the amount of expenditure incurred in relation to such income which does not form part of the total income in accordance with the method as may be prescribed. Such power is to be exercised if the AO having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of the expenditure mentioned in sub-sec.(1). Before applying Rule 8D, it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before us vehemently relied on the decision of Godrej Boyce Mfg Co. Ltd. Vs DCIT 328 ITR 81 (Mum). 15. We have gone through this decision and we noted that in this case, the assessee claimed exemption in respect of dividend income of 34.34 crores u/s 10(33). The AO issued notices for disallowance of interest u/s 14A of the IT Act. The explanation of the assessee was that (i) 95% of the shares were bonus shares for which no cost was incurred; (ii) No investment in shares was made in the current year and no disallowance was made in earlier years and (iii) There were sufficient interest free funds available in the form of share capital, reserves etc. which were more than investment in shares. The AO was not satisfied with the explanation of the assessee and he made disallowance u/s 14A on prorata basis. The CIT(A) following his orders for earlier years, accepted the appeal of the assessee. The Tribunal following the decision of the Special Bench in the case of ITO Vs Daga Capital Management (P) Ltd 117 ITD 169 (SB) restored the matter to the file of the AO for the consideration in the light of the provisions of sub-sec.(2) (3) of Sec.14A of the IT Act. The assessee, being aggriev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is only when the AO is not satisfied with the claim of the assessee, that the legislature directs him to follow the method that may be prescribed. In a situation where the accounts of the assessee furnish an objective basis for the AO to arrive at a satisfaction in regard to the correctness of the claim of the assessee of the expenditure which has been incurred in relation to income which does not form part of the total income, there would be no warrant for taking recourse to the method prescribed by the rules. For, it is only in the event of the AO not being so satisfied that recourse to the prescribed method is mandated by law (pages 31-32). 6. In the event that the AO is not satisfied with the correctness of the claim made by the assessee, he must record reasons for his conclusion (page-79). 7. The effect of sec.14A is to widen the theory of the apportionment of expenditure (page 49). 8. The expression expenditure incurred; in Sec.14A refers to expenditure on rent, taxes, salaries, interest, etc., in respect of which allowances are provided for (page-50). 9. Sub-sections (2) (3) of Sec.14A are intended to enforce and implement the provisions of sub-sec (1) (pages ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... diture incurred and the income not forming part of the total income. If such proximate connection is established with the exempt income, the AO would be justified in applying the provisions of sub-sec (2) (3) of sec.14A and Rule 8D of the IT Act, 1961. The expenditure incurred u/s 14A would include direct and indirect expenditure, but relationship with exempted income must be proximate. If there is material to establish that there is direct nexus between the expenditure incurred and the income not forming part of total income then disallowance would be justified even where there is no receipt of exempted income u/s 10 in the year under consideration in view of the decision of Special Bench in the case of Cheminvest Ltd. 124 TTJ 577 (Del)(SB). 17. The basic principle of taxation is to tax the net income. On the same analogy, the exemption is also to be allowed on net basis i.e. gross receipts minus related expenses. Therefore, if any expenditure is directly related to exempted income, it cannot be allowed to be set off against taxable profit. On the same analogy, in our opinion, if any expenditure is directly related to taxable income, it cannot be allowed to be set off against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bring any cogent material or evidence in this regard which may prove that the other expenses claimed by the Revenue for apportionment had proximate connection with the earning of the dividend income. In our opinion until and unless this is proved or established by the revenue, the assessing officer does not have any power to reject the accounts of the assessee and take the shelter of Rule 8D for computing the disallowance out of the exempt income. We are not at all convinced with the submission of the Ld. DR relying on the decision of CIT(Appeal) in respect of Explanation bb to sec. 80HHC that 10% of the receipts under the sources mentioned therein are deemed to be the expenditure. This in our opinion will strengthen the case of the assessee as Explanation bb to sec. 80HHC does not recognize amount of the investment made in other receipt to be the basis of computing the expenditure being incurred for the earning of that income. Similar views have been taken by Hon'ble Tribunal in the following decisions also. In the case of DCIT Vs. Jindal Photo Ltd. held in I.T.A.T. Delhi bench dated 7.1.2011 it was held as follows: Now as per section 14A(2) of the Act, if the AO, havi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the assessee s calculation being incorrect. Even so, Rule 8D of the Rules has been applied. This, in our opinion, is not correct. Such satisfaction of the Assessing Officer is a pre-requisite to invoke the provisions of Rule 8D of the Rules. The Learned CIT(A), therefore, erred in partially approving the action of the Assessing Officer . In the case of Avshesh Mercantile P. Ltd. Vs. DCIT in I.T.A.T. Mumbai Bench (I.T. Act No.5779/Mum/2006 208/Mum/2009) it was held as follows: At the time of hearing, the contention raised by the learned DR in this regard is that the appeal of the Revenue on the issue having been dismissed by the Hon'ble Bombay High Court merely observing that no question arises, it cannot be treated as a decision rendered by the Hon'ble High Court on the merit of the issue which is binding on this Tribunal. We are unable to accept this contention of the learned DR. It is well settled proposition of judicial precedents that is appeal the Hon'ble High Court considers facts pertaining to the issue and gives approval to the decision of the lower forum, the decision of lower forum gets merged with the judgment and order of the High Court and it be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respectfully follow the said decision of the jurisdictional High Court and delete the disallowance made by the AO and confirmed by the learned CIT(A) on account of premium paid by the assessees on redemption of premium notes (OCPN) by invoking the provisions of section 14A of the Act. As regards the case laws cited by the Learned DR, it is observed that in none of these cases, the facts involved were similar to the case of the present assessees in as much as the investment made therein was not found to be capable of earning taxable as well as exempt income which was actually not earned by the assessee in the relevant period as are the facts of the present case or that of the case of Delite Enterprise (supra) decided by the Hon'ble Bombay High Court. Accordingly, we decide the common issue involved in all these appeals in favour of the assessees following the decision of jurisdictional High Court in the case of Delite Enterprises (supra) and allow the appeals of all the assessees . 18. We have also gone through the decision relied upon by the learned DR also. The decision of ACIT Vs CITICORP Finance (Ind.) Ltd., 108 ITD 457 (Bom.) is no more relevant, in view of the decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raightaway applied Rule 8D and made disallowance. He has put the cart before the horse which is not permissible under law. The case of the Assessee, in our opinion, is covered by our aforesaid decision in the case of Sesa Goa Ltd. vs. JCIT (supra). Respectfully following the decision in the case of Sesa Goa Ltd. vs. JCIT (supra), we delete the disallowance made u/s 14A. Similar view has been taken by this Bench in ITA No. 34/PNJ/2013 ITA No. 50/PNJ/2013 in the case of M/s. Infrastructure Logistics Pvt. Ltd. vs. ACIT. Thus, this ground is allowed. 4. Ground no. 3 in Assessee s appeal relates to sustenance of the addition of Rs. 6,98,926/-. The AO during the course of the assessment noted that there was a credit balance in the name of M/s. Hiralal Khodidas of Rs.59,40,707/-. The above party in reply to notice u/s 133(6) informed that they have debited balance of Rs.47,43,037/-. When the Assessee was questioned about the difference of Rs.11,97,670/-, the Assessee submitted that TCS of Rs.2,330/- has not been shown by M/s. Hiralal Khodidas in its books of accounts and an amount of Rs.1,09,089/- debited by the creditor has been accounted by the Assessee in the subsequent year and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aining the addition to the extent of Rs.2,52,064/- in the absence of any evidence being produced. 5.1 We have heard the rival submissions and carefully considered the same. Before us also, the Assessee did not produce any evidence except relying on the provisions of Sec. 41(1) that the liability has not ceased and that until liability is not ceased, the sum of Rs.2,52,064/- cannot be treated to be the income of the Assessee. In respect of the ground taken by the Revenue for Rs. 30 lacs, the submission made before CIT(A) were reiterated. The ld. DR, on the other hand, relied on the order of the AO. We have carefully considered the rival submissions, perused the material on record. We have gone through the order of CIT(A). It is a fact that a sum of Rs. 30 lacs included in the Sundry Creditors as on 31.3.2009 has been paid by the Assessee to M/s. Mayur Minerals through cheque no. 238933 dt. 10.4.2012. In view of this undisputed fact, we confirm the deletion of the addition by the CIT(A) to the extent of Rs. 30 lacs. So far the balance sum of Rs. 2,52,064/- is concerned, no evidence whatsoever has been filed by the Assessee whether these creditors still exist. It is also a fact tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nces have been given to the employees and others for the purpose of the business of the Assessee company during the course of the business. As the employee left the company, the amount could not be recoverable. The advances were also not recoverable from the other parties. The Assessee did not prefer to take delivery of the car as reports of the car on Indian roads were not good. For this, attention was drawn towards the letter of the Assessee dt. 16.12.2011 submitted to the AO. 6.2 The ld. DR, on the other hand, relied on the order of the authorities below. 6.3 We have heard the rival submissions and carefully considered the same. We have gone through the order of the authorities below. We noted that it has not been denied by the Revenue that Rajendra S. Kakodkar was an employee of the Assessee. The advances were given by the Assessee during the course of the business. These advances have not been recovered by the Assessee. Rajendra S. Kakodkar has left the services of the Assessee and is no more an employee of the Assessee. Under these facts, the Assessee has written off the advance. So far as the other advances are concerned, we noted para 9.1 of CIT(A) s order which conta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accepted as being incidental to the business. In view of this, we delete the addition. Thus, ground no. 6 is allowed. 8. Ground no. 7 in Assessee s appeal relates to sustenance of the addition of Rs.42,93,066/- by the CIT(A). The brief facts relating to this addition are that the Assessee has shown ground loss of 48,330 MT of iron ore in Greater Ferromet and 23,025 MT of iron ore in SFI at Berth no. 9 (Vessel Loading Point). The iron ore is being transported from Capxem/Maina jetty to Berth No. 9 for export. The loss so incurred works out to 2.54% in Greater Ferromet and 3.54% in SFI. The AO was of the opinion that there cannot be different handling loss in Greater Ferromet and SFI. It must be at the same rate. Therefore, he called for explanation of the Assessee. The Assessee gave explanation vide his letter dt. 16.12.2011. The AO did not accept the explanation of the Assessee. The Assessee calculated the ground loss on 18,97,335 MT of iron ore handled in Greater Ferromet at 2.54% and in respect of SFI in which 6,49,975 MT of iron ore was handled at 3.54%. The AO was of the opinion that the ground loss in respect of iron ore handled in Greater Ferromet and SFI unit must be same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the view that it is a speculation loss and disallowed the same. The Assessee went in appeal before CIT(A). CIT(A), on the basis of the decision of the jurisdiction High Court in the case of CIT vs. Badri Das Gauridu Pvt. Ltd., 261 ITR 256 took the view that the loss incurred by the Assessee on forward contract had a direct nexus and deleted the disallowance. 9.1 The ld. DR before us even though relied on the order of the AO but could not bring to our knowledge any other decision of the jurisdiction High Court or that of the Hon'ble Supreme Court which would have taken a contrary view than that taken by the Hon'ble High Court of Bombay in the case of CIT vs. Badri Das Gauridu Pvt. Ltd., 261 ITR 256 (supra). Even it was not the case of the revenue that the said decision was not applicable in this case. Under these facts of the case, we are of the view that no illegality or infirmity is caused in the order of CIT(A) while deleting the disallowance on account of foreign exchange loss on forward contract. We, accordingly, dismiss ground no. 2 taken by the Revenue. 10. Ground no. 3 in Revenue s appeal relates to disallowance of Rs.35,15,625/- incurred by the Assessee by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns and carefully considered the same. We noted that CIT(A) while deleting the said disallowance relied on the decision of ITAT Panaji Bench in ITA no.162/PNJ/2006 in the case of Chowgule and Co. Ltd. vs. ACIT, Margao in which the Tribunal has held that the contribution to Goa Infrastructural Development Co. Pvt. Ltd. for repairs and maintenance of roads frequently used by the company to transport its goods is not a capital expenditure but expenditure incurred for the purpose of the business. It is a social obligation demanded by the local community which cannot be overlooked by the assessee. Even though the ld. DR vehemently relied on the order of the AO, no contrary decision was brought to our knowledge and no material or evidence was brought to our knowledge which may prove that the project belonged to the Assessee and it represents capital expenditure incurred by the Assessee. We have also gone through the decision as relied by the ld. AR in the case of L.H. Sugar Factory and Oil Mills (P) Ltd. vs. CIT, 125 ITR 293 (supra) and that of Hon'ble Madras High Court in the case of CIT vs. Coats Viyella India Ltd., 253 ITR 667 (supra). We noted that these decisions are also equally ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bring any instance which may prove that the expenses are person expenses, capital expenditure or have not been incurred for the purpose of the business. In view of this, in our opinion, no interference is called for in the order of CIT(A). CIT(A) has rightly deleted the disallowance. 12. Ground no. 5 in Revenue s appeal relate to deletion of the addition of Rs.12,60,00,000/-. The brief facts relating to this ground are that the Assessee during the assessment year under consideration declared Long Term Capital Gains amounting to Rs. 12,59,41,410/- on account of relinquishment of rights in the share in partnership firm, M/s. Banashankari Mining Corporation Bangalore. However, after set off of brought forward loss, Long Term Capital Gains declared by the Assessee comes to Nil. There was one partnership firm, M/s. Banashankari Mining Corporation Bangalore consisting of partners, Shri Thakur Dilip Singh and Ms. Bijali Mahalakshmi Singh. On 8.10.2002 the Assessee entered into this partnership firm with a nominal share capital of Rs. 45,000/- and Ms. Bijali Mahalakshmi Singh retired from the said firm. As per the Deed of Reconstitution of the firm, the business of the firm is Mining, P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Assessee with an intention of extracting the ore and selling it. The Assessee has already been in the business of mining and exporting of iron ore. The investment in the firm M/s. Banashankari Mining Corporation Bangalore or obtaining mining licence at Gollarhalli, Tumkur was with an intention of expanding the business of mining activity or to get high grade ore from Karnataka to augment the Assessee s iron ore business in Goa. Even the objects of the Assessee s investment in the mining lease were to earn business profit. Therefore, show cause notice was issued by the AO to the Assessee. In response thereto, the Assessee vide letter dt. 30.11.2011 submitted as under : a. That the amount received on retirement from M/s Banashankari Mining Corporation (the partnership firm) was shown as receipt from the sale of mining lease. We may clarify that we have received the monies towards our share in the partnership; and b. That the mining lease was obtained by us with an intention of extracting ore and selling the ore so extracted firstly, we have not obtained any mining lease, an application for obtaining concession / mining lease was filed by the partnership firm and not by u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y representing the value of the property. No doubt, since a firm has no legal existence, the partnership property will vest in all the partners and in that sense every partner has an interest in the property of partnership. During the subsistence of the of the partnership however, no partner can deal with any portion property as his own. Nor can be assign his interest in a specific item of the partnership property to anyone. His right is to obtain such profits, if any, as fall to his share from time to time and upon the dissolution of the firm to a share in the assets of the firm which remain after satisfying the liabilities set out in clause (a) and sub-c/s. (i), (ii) and (iii) of clause (b) of 5. 48. 5. We therefore submit that it is incorrect to suggest that what has been transferred by us under the agreement dated July 15, 2008 is the mining lease. We submit that he consideration received by us on retirement is a capital receipt. Reliance is placed on the following. We are fortified in our view by the following decisions, copies whereof are enclosed: a. Prashant S. Joshi Vs. ITO (324 ITR 154) (Bom) b. A. K. Sharafuddin Vs. CIT (39 ITR 333) (Mad) c. CIT Vs. Ganesha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be unviable, therefore, after remaining partner for almost 7 years, the Assessee alongwith other partner, Shri Thakur Dilip Singh decided to transfer their interest in the partnership firm when approached by M/s. BRN-Black Diamond Oversea Mining Projects Pvt. Ltd. Bangalore in their favour by relinquishing partnership rights in the said firm vide agreement dt .15.7.2008. The Assessee entered into partnership with the intention to operate the mine and not with the intention to procure the concession and sell the same as alleged. As per the Assessee s information, till date no lease/concession has been executed by the Central Government in favour of the partnership firm. In the hands of Shri Thakur Dilip Singh, the AO assessed the said receipt under the head Capital Gains. The same treatment should be given in the case of the Assessee. CIT(A) after going through the submission of the Assessee treated the consideration so received as Capital Gains by observing as under : I have gone through the facts of the case contents of the assessment order and written submission of the assessee. The AO has relied on the following case laws: 1. Eclat Construction Company Pvt. Ltd. Vs. CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e partner with capital and before commencement of the business activity the assessee relinquished its share and compensation received by the assessee is treated as a capital gain but not the income from business. Hence the addition made by the AO dismissed and this ground of the appeal is allowed. 12.1 Before us, the ld. AR reiterated the submission made before the CIT(A). The ld. AR after taking us through the various agreements entered into between the Assessee when the Assessee became the partner, the agreement entered into between the Assessee and M/s. Banashankari Mining Corporation Bangalore as well as the agreement dt. 23.4.2009 vehemently contended that what the Assessee has sold to M/s. BRN-Black Diamond Oversea Mining Projects Pvt. Ltd. Bangalore is its right in partnership firm and the consideration received was a capital receipt chargeable to tax under the head Income from Capital Gains . The Assessee by becoming partner in the firm got right as a partner and whatever concession/mining lease, if to be allotted to the firm, would be treated as profit earning apparatus for the firm. The Assessee has simply relinquished his right in the partnership firm and relinqui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p Singh to be a capital receipt in his hand. The consideration is not for carrying on any business activity. The consideration is for the transfer of the rights, whatever the Assessee was having in the partnership firm. We have also gone through the decision as relied by the ld. AR. The issue is duly covered by the decision of the Hon'ble Madras High Court in the case of A.K. Shrafuddin vs. CIT, 39 ITR 333 (Mad) (supra) wherein it was held that the compensation received by one partner of the partnership firm from another partner for relinquishing his right in the partnership is the compensation for loss of capital asset and is not a trading receipt. The AO relied on the decision of JCIT vs. Khanna and Anndhanam, 115 TTJ 663 (Delhi), but this decision, we noted, has subsequently been reversed by the Hon'ble Delhi High Court vide order dt. 29.1.2013 in ITA No. 1286/08. Even we noted that the facts of this case are entirely different. In this case, the partner has not relinquished his rights in the partnership firm in favour of another party. We have also gone through the decision of the Hon'ble Bombay High Court in the case of N.A. Mody vs. CIT, 162 ITR 420. We noted that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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