9911796707
TMI Blog1980 (3) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... ustries, respectively, at head office and branch office. The firm, M/s. Kewal Ram Uggar Sain, was constituted as per instrument of partnership dated 30th June, 1951. It consisted of eight partners out of whom four partners, namely, Sarvshri Kirat Chand. Mahabir Parshad, Sukhbir Parshad and Phool Chand, retired from the partnership on 19th January, 1967. At the time of their retirement, the said four partners were paid a total sum of Rs. 10,00,000. The said four outgoing partners had in the profits of the said firm shares to the extent of 3 1/2 annas; 2 annas; 1 1/2 annas and 1 anna per rupee respectively. The interest of these outgoing partners in the assets of the said partnership had not been specified to be different. No deed of dissolut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are in the distributed assets of the firm. He, however, accepted the assessee's contention to the limited extent that the said amount included the value of the assessee's share of the firm's goodwill (based on quota rights). The ITO estimated the total value of the firm's goodwill as on 19th January, 1967, at Rs. 4,00,000 (by implication) and computed the value of the assessee's 1/8th share at Rs. 50,000. The balance amount of Rs. 2,00,000 was treated by the ITO as the assessee's profits and gains from the business. On appeal, the AAC held that the assessment of Rs. 2,00,000 was of a protective nature, and that the amount in question was not a revenue receipt and further it was not assessable even as capital gains because of the bar in s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vities already carried on by the assessee. This certainly would, be a distinguishing feature warranting exclusion of the applicability of the ratio in Gangadhar Baijnath's case to the present case. We are, however, unable to hold that by joining the old firm, the assessee had not replaced one trading activity by another or that the act of joining the firm was not just one of the activities of business earlier carried on by the assessee. We find that the opening recital of the partnership deed dated June 30, 1951, clearly mentions that the assessee Mahabir Parshad (described as partner No. 5 in that deed) had been earlier carrying on business until before 30th June, 1951, in partnership with six other partners (five of them being partners of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g from termination of the partnership contract dated 30th June, 1951, as contemplated in the reported case of Gangadhar Baijnath. On an application being made by the assessee, the Tribunal has referred the following question of law for the opinion of this court: "Whether, on the facts and in the circumstances of the case, was the Income-tax Appellate Tribunal justified in law in holding that a sum of. Rs. 2,00,000 is a business receipt and as such includible in the computation of the assessee's income ?" I.T. Ref. No. 39 of 1976 has been made at the instance of another retiring partner of the firm, Shri Sukhbir Parshad. In his case, a sum of Rs. 1,50,000 has been held to be business income and has been assessed as such. The remaining ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... annex. F with the paper-book. It has been further provided that the reconstituted firm became the absolute and irrevocable owner of all the movable and immovable properties, titles, rights and interest in the properties of the old firm as specified in the schedule. In the schedule we find mention of the land, machinery, plant and equipment, all assets and liabilities of the firm including the stock-in-trade, etc., etc. A look at the schedule clearly points out that the interests in movable and immovable properties were transferred by the outgoing partners, and compensation of Rs. 10,00,000 received by them included the capital assets. With a view to answer the questions referred to this court, we deem it necessary to call upon the Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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