Law:

Section:

JUDGMENT N.D.P. Namboodiripad, J.- The question referred for the opinion of the court is: "Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is correct in law in holding that the amount of Rs. 32,000 cannot be subjected to tax as capital gains?" The reference arises out of an assessment for the year 1965-66. The assessee had been practising as a chartered accountant at Kottayam under the firm name "Jacob & Mathew" from the year 1951. During the accounting year relevant to the assessment year in question, the assessee took in as his partner, another chartered accountant, Sri. Venkata-narayanan, on July 15, 1965 ; and annexure "D" is the deed of partnership dated July 15, 1965, entered into between the two partners. The main item in the assets of the assessee which were taken over by the newly constituted firm was the goodwill which was valued at Rs. 32,000. As between the assessee and his partner, the net profit or loss of the business of the partnership was agreed to be divided in the proportion of 75% and 25%, respectively. Towards his share in the goodwill obtained by the firm, the partner paid the assessee an amount of Rs. 8,000. The firm continued only till October 19, 1965, when the assessee was appointed as Accountant Member of the Kerala Sales Tax Appellate Tribunal. There was a consequent dissolution of the firm ; and the assessee received Rs. 24,000 towards his share of the goodwill of the firm. During the assessment proceedings, the assessee took up the stand that the aforesaid Rs. 32,000 received by him in two instalments was not liable to be taxed. The Income-tax Officer, on the other hand, proceeded on the basis that with the formation of the partnership the assessee must be deemed to have transferred the goodwill of his profession and that the entire amount of Rs. 32,000 was taxable as "capital gains". In the appeal preferred by the assessee, the Appellate Assistant Commissioner substanti-ally confirmed the assessment on somewhat different grounds. The assessee, thereupon, took the matter in appeal before the Income-tax Appellate Tribunal, where he reiterated the earlier contention and pressed into service…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492