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TMI Blog2019 (2) TMI 457X X X X Extracts X X X X X X X X Extracts X X X X ..... the compensation received, stands negatived by the office note annexed to the Assessment Order dated 26th December, 2011. In any event, the issue on merits in our view, is covered by the decision of this Court in Prashant S. Joshi [2010 (2) TMI 271 - BOMBAY HIGH COURT], even though the order was in the context of reopening notices. It was in the above context, the Court examined the scope of Section 45(4) of the Act to hold that in terms thereof, on dissolution of the firm or otherwise, the capital gains arising from transfer of a capital asset, would be chargeable to tax as income of the firm. Revision order u/s 263 is not valid - Decided against the revenue. - INCOME TAX APPEAL NO. 1203 OF 2016 - - - Dated:- 31-1-2019 - AKIL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rms introduced a new partner namely M/s. Housing Development Infrastructure Ltd., (HDIL) as a partner in its firms. The Petitioner did not offer the amount received on retirement from both the firms in its return of income filed on 29th September, 2009. In its return, the Respondent declared total income at 'Nil'. However, the Assessing Officer during the course of assessment on enquiry, noted and accepted that, the amount received by the Respondent on its retirement from the two partnership firms of ₹ 22.96 Crores and ₹ 6.31 Crores, respectively, was not taxable in its hands. This resulted in an Assessment Order dated 26th December, 2011 under Section 143 (3) of the Act, determining the Respondent's loss at ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal held that, the view taken by the Assessing Officer that, the amounts received by the Respondent-Assessee on retirement from the firms is not taxable in the hands of the Respondent is a view in accord with as held by the Supreme Court decisions in CIT v/s. Mohanbhai Pamabhai 165 ITR 166, CIT v/s. Sunilbhai 156 ITR 509 and the decision of the Apex Court in CIT v/s. Tribhuvandas G. Patel 236 ITR 515 (which overruled the decision of the High Court in Tribhuvandas Patel (supra). Besides, the decision of this Court in Prashant S. Joshi v/s. ITO 324 ITR 154 wherein all the above cases have been considered to hold that, a payment made by a partner on his retirement from the firm being the realization of its share of a net value ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Respondent has relinquished its interest and share in the partnership firm. Thus, the impugned order dated 18th December, 2014 of the Tribunal requires interference by this Court. 7. We note that the Assessment Order annexed to the appeal memo also encloses to it an office note made by the Assessing Officer. This office note clearly indicates that, the Assessing Officer had made necessary enquiries with regard to the amounts received by the Respondent on its retirement in the context of taxability on account of capital gains of the amounts received on retirement by the Respondent. Thus, the contention of the Revenue that, no enquiry was done by the Assessing Officer with regard to the compensation received, stands negatived by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, it should be treated as falling under clause (ii) of section 47. Therefore, the question was answered in favour of the assessee and against the Revenue. Section 47(ii) which held the field at the material time provided that nothing contained in section 45 was applicable to certain transactions specified therein and one of the transactions specified in clause (ii) was distribution of the capital assets on dissolution of a firm. Section 47(ii) was subsequently omitted by the Finance Act of 1987 with effect from April 1, 1988. Simultaneously, subsection (4) of section 45 came to be inserted by the same Finance Act. Subsection (4) of section 45 provides that profits or gains arising from the transfer of a capital asset by way of distribut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of a partner and dissolution of firm. The above decision of the Tribunal placed reliance upon the decision of this Court in Tribhuvandas G.Patel [115 ITR 95] (supra) which has been reversed by the Apex Court in Tribhuvan Das G. Patel [236 ITR 515] (supra). In any case, at the very least, there are two possible views and adoption of one of the two views will not make the order of the Assessing Officer erroneous so as to be subject to Revisional jurisdiction under Section 263 of the Act. This has been so held by the Apex Court in CIT v/s. Max India Ltd., 295 ITR 282 , for the reason that in such cases, it cannot be treated as an erroneous order prejudicial to the Revenue. In any event, the issue on merits in our view, is cover ..... X X X X Extracts X X X X X X X X Extracts X X X X
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