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TMI Blog2011 (3) TMI 1644X X X X Extracts X X X X X X X X Extracts X X X X ..... ich the Assessee became a partner of the firm and retired from the firm were as follows: 1. Assessee and Mr. Rakesh Kumar Wadhwan entered into a partnership under a deed of partnership dated 01.08.2005 for the purpose of development of the property. 2. The name of the firm so formed was M/S. D.S. Corporation. 3. On 16th September 2005, another deed of admission cum partnership of partners was executed admitting Smt. Hemlata S. Shetty as partner of the firm. 4. On 23.09.2005, the firm M/s. D.S. Corporation purchased from one Mr. Percival Joseph Pereira the property for a consideration of ₹ 6.50 crores. The said plot was occupied by 81 tenants. The stamp duty officer valued the said plot, which was occupied by 81 tenants, at that time at ₹ 6,50,00,000/- and the stamp duty was paid on the basis of the said valuation. The conveyance was duly registered. 5. On 26.09.2005, another deed of admission cum reconstitution of partnership was executed. The following 2 more partners were admitted to the partnership :- 1) Prithvi Realtors & Capital Private Limited 2) Shri Sarang R. Wadhwan 6. The firm thereafter applied to the Maharashtra Tourism Development Corporat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wed the following position: Opening balance as on 1-4-2005 nil- Deposits during the previous year Rs. 4,45,00,000 Interest ₹ 26,85,963 Profit on revaluation ₹ 30,87,98,087 Total ₹ 35,59,84,050 Thus as on 31.03.2006 the sum standing to the credit of his capital account was ₹ 35,59,84,050/-. 12. On 22.05.2006, the Assessee retired from the partnership firm and was paid the sum standing to the credit of his capital account. But for the revaluation of the asset, the capital account of the partner would not have shown a sum of ₹ 35,59,84,050/-. To the extent of ₹ 30,87,98,087/- the capital account has been artificially increased just to ensure that the retiring partner is paid consideration standing to the credit of his capital account. 4. On the above facts, the Tribunal held that it was a case where instead of quantifying the Assessee's share by taking accounts on the footing of notional sale, parties agreed to pay a lump sum in consideration to the retiring partner assigning or relinquishing his share or right in the partnership and its assets in favour of the continuing partners. Thus the retiring partner was paid something ove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not open to the Tribunal to say so and by doing so, the Tribunal which is a subordinate body has sat in appeal over the judgment of High Court. Thus the Tribunal by disagreeing with the view expressed by the Hon'ble High Court has committed a mistake which is apparent from the record. 6. The Tribunal did not consider the argument of the learned counsel for the Assessee that whatever is received by an Assessee from the firm cannot be taxed in the hands of the partner in view of the scheme of taxation of firms which exempts the share of profits received by a partner from a firm from taxation in the hands of the individual partner. According to the Assessee this argument raised by the learned counsel for the Assessee by relying on the provisions of section 10(2A) of the Act, has not been considered by the Tribunal. 7. That the Tribunal failed to consider the decision of the co-ordinate Bench rendered in the case of ITO Vs. Smt. Paru D. Dave dated 22.12.2006 in ITA No.2583/Mum/1999 for A.Y. 94-95 reported in 111 TTJ 288 (Mum) in which the Tribunal has held that on retirement of a partner from a firm, there is no incidence of capital gain tax in the hands of the retiring partne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he decision in the case of Smt. Parul Dave (supra) was never discussed by the learned Counsel for the Assessee in the course of hearing of the appeal. In any event according to him the said decision was not applicable as it was a case of mere revaluation of assets and there was no retirement. He relied on the decision of the Hon'ble Supreme Court in the case of Sun Engineering 198 ITR 297 (SC) for the proposition that one cannot pick and choose sentences from a judgment divorced from the context in which the said judgment was rendered. He submitted that the decision in the case of Prashant Joshi (supra) was a case on validity of initiation of reassessment proceedings and therefore not relevant to the case decided by the Tribunal. He submitted that section 10(2A) of the Act had no application because in the case of the Assessee what he received was not share of profits from the firm. According to him the M.A. is devoid of merit and should be dismissed as there is no apparent mistake on the face of the record of the Tribunal. 8. We have considered the rival submissions. We will deal with each of the objections raised by the Assessee in the M.A. The objection listed at serial No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal. In fact, we have in para 38 of our order explained that the mode of retirement will be relevant and thereafter we have examined the mode of retirement of the partner and applied the ratio laid down by the Hon'ble Bombay High Court in the case of N.A. Mody (supra). The allegation in the M.A. that the Tribunal has refused to follow the decision of the Hon'ble Bombay High Court in the case of Prashant S. Joshi by observing that the Hon'ble Court had not considered an earlier judgment on the issue and that it was not open to a subordinate Court/Tribunal to disagree with the decision of Hon'ble High Court, is not correct. The view expressed by the Tribunal in para 52 of its order is that mode of retirement in the case of N.A. Mody (supra) was different from the mode of retirement in the case of Prashant N. Joshi (supra) and since the mode of retirement in the case of the Assessee was same as was in the case of N.A. Mody (supra), the Tribunal followed the ratio laid down in that decision. In para 38 of the order, we have explained as to how the decision in the case of N.A. Mody (supra) would still be relevant even after the decision of the Hon'ble Supreme C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , although it may be an error of judgment. The Tribunal cannot in exercise of its power of rectification look into some other circumstances which would support or not support its conclusion. The Tribunal cannot redecide the matter and it has no power to review its order. The Tribunal has no power to rectify a decision on debatable point of law. The Tribunal does not have the power to review its own decision except what is authorised under section 254(2). A decision on debatable point of law is not a mistake apparent from the record. 14. The circumstances under which Tribunal can exercise powers under section 254(2) are where the Tribunal has overlooked the relevant material on record. In such a case it would be an error apparent from record which can be rectified by setting aside the order for fresh consideration. Where a material fact brought to the notice of the Tribunal has been lost sight of, the Tribunal has the power to rectify the mistake so committed; provided the material fact has an important bearing on the ultimate decision. In the present case both the aforesaid situations do not exist. 15. We are of the view that the present M.A. is devoid of any merit and the same i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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