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TMI Blog2020 (9) TMI 1129X X X X Extracts X X X X X X X X Extracts X X X X ..... only issue that arose for consideration in the appeal was as to whether the Revenue authorities were justified in treating sum of Rs. 11,61,800/- as capital gains chargeable to tax which sum was received by the assesee on his retirement from a partnership firm by name M/s PSI Hydraulics. The facts and circumstances under which aforesaid issue arises for consideration are that the Assessee and one D. Venkatesh formed a partnership by a Deed of Partnership dated 1.4.2004. Miss Suvidha Venkatesh, D/o. D. Venkatesh was inducted as partner in the firm w.e.f. 1.4.2007. On 8.6.2007 a MOU was signed by the three partners and it was agreed that the Assessee would retire from the firm w.e.f. 1.4.2007 and a sum of Rs. 339.50 lakhs would be paid to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... factors like the intention as is evidenced by the various clauses of the instrument evincing retirement or dissolution, the manner in which the accounts have been settled and whether the same includes any amount in excess of the share of the partner on the revaluation of assets and other relevant factors which will throw light on the entire scheme of retirement/reconstitution. The final conclusion of the Tribunal in paragraph- 31 was as follows: "31. Keeping in mind the legal position as set out in the earlier paragraphs, let us examine the facts of the present case. The facts of the case are almost identical to the facts in the case of Sudhakar M.Shetty (supra). The Assessee and D.Venkatesh formed a Partnership by a deed of partnership ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ital account and Rs. 38,38,200/- being Goodwill, was the sum payable as per the capital account of the Assessee. The claim of the Assessee that the entire sum of Rs. 61,61,800 is Goodwill is not substantitated by entries in the books of accounts of the Assessee and the book entries are only for Rs. 38,38,200/- recorded in the Assessee's capital account as well as Goodwill Account. The capital gain therefore would be Rs. 339.50 lacs minus Rs. 2,77,88,200 + 38,38,200 = Rs. 23,23,600/-. The Assessee had invested a sum of Rs. 50 lacs in specified bonds and therefore the AO allowed deduction upto Rs. 50 lacs. Therefore there would no capital gain which is chargeable to tax." 4. In this MA the revenue has submitted that while in para 34 the Trib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relinquishment, over and above the sum credited to the capital account of the concerned partner should be regarded as capital gain and brought to tax. Goodwill was not an asset which was subject matter of transfer and therefore the provisions of section 55(2)(a) of the Act will not apply. What was subject matter of transfer was right of partner in the partnership firm which comprises of several components, goodwill being one of the components. Apart from the above, we are also of the view that the issue that is sought to be agitated by the revenue in this miscellaneous petition is a highly debatable issue. The jurisdiction u/s. 254(2) of the Act confined only to rectifying mistakes that are apparent on the face of record. In the garb of a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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