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TMI Blog1986 (6) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... ed from the business of the partnership until the date of the compromise and partially to the extent of the balance as relatable to the compensation and, if so, whether the compensation amount could be fixed at Rs. 30,500 and the balance at Rs. 60,000 as a matter of fact ? " 3. Even if it is held that the sum of Rs. 60,000 or any other portion out of the amount of Rs. 90,500 is regarded as arising on revenue account, whether it is proper to regard this entire amount as accruing or arising within one year, the previous year relevant to the assessment year 1973-74, or could be regarded as accruing in any of the preceding previous years so as to be assessable not in its entirety for the assessment year 1973-74 but during the assessment year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered into a compromise on November 2, 1972, and the compromise decree reads as follows: "a. K. Eapen Jacob agrees that the firm Nilgiris Mining Corporation Ltd. was only a partnership at will, and that the deed of dissolution dated January 17, 1964, executed by late Mr. Thillai, the first appellant in the above second appeal and three other partners, A. Chami, P. V. Chaminar and K. S. Mani, is valid, effective and binding on him. b. That the firm has no sole selling agency rights as claimed in the suit, O. S. No. 40 of 1964, on the file of the Court of the Subordinate Judge, Ootacamund. c. That consequently the said suit, O. S. No. 40 of 1964, shall stand dismissed and the decree passed thereon on April 23, 1968, and confirmed by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rn, he claimed a sum of Rs. 90,500 as capital receipt and not taxable as income. However, the Income-tax Officer took the view that it is a revenue receipt assessable to income-tax on the ground that: " this represents profits which the assessee would have made had the partnership continued. The entire sum of Rs. 90,500 has been received towards loss of earnings" On appeal, the Appellate Assistant Commissioner accepted the contention of the assessee that the amount received by him was for relinquishing all his rights in the partnership and that no part of it related to his business income and that, therefore, the inclusion of the sum of Rs. 90,500 as revenue income cannot be sustained. In that view, the appeal was allowed. The Revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eded, the other partners were questioning the finding of the District judge in appeal before this court contending that the partnership was at will and it was dissolved on January 17, 1964, and the plaintiff assessee had no right or interest in the business on or after January 17, 1964. When the parties compromised the matter accepting that the partnership was at will and that the deed of dissolution dated January 17, 1964, was valid, it could only mean that the parties have decided to settle their disputes with reference to the date of dissolution as January 17, 1964, and there would be no case for taking into account any profit from 1964 to 1972 when the compromise was entered into. Even on that basis, the other defendants agreed to give ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to him, they partake of the same character as that from out of which the amount in each case is paid. " No serious objection could be taken to this statement of the law. However, we find that there is nothing on facts to show that there were any accumulated profits which were included in determining the compensation at Rs. 90,500. As already stated, under the compromise, the parties agreed that there was a dissolution on January 17, 1964. Therefore, if there had been any accumulation of profits, it should be profits that accrued from the date of partnership, namely, October 18, 1961, till January 17, 1964. On that absolutely there is no evidence to show that there was any profit or accumulated profit and that the parties had not withdraw ..... X X X X Extracts X X X X X X X X Extracts X X X X
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