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Section 47(ii) of the Income-tax Act, 1961 - Capital gains - Transactions not regarded as transfer - By a deed executed between him and his only other partner, assessee relinquished his share in partnership for a certain amount of consideration - Whether impugned amount was value of assessee's share in partnership on dissolution and, therefore, was entitled to exemption under section 47(ii) - Held, yes Facts The assessee was a partner in a firm along with only one other. A deed was executed between the assessee, and his partner under which the assessee relinquished his share in the partnership for a certain amount of consideration. The ITO taxed the impugned amount. However, on appeal, the Tribunal declined to consider the impugned amount as business income or profit, as in its view the same was exempt under section 47(ii). Further, the Tribunal rejected the application seeking reference. On application under section 256(2): Held There were only two partners. Upon the assessee relinquishing his share in the partnership, there was a dissolution since a partnership, could not subsist with only one partner. It was not necessary that there should be a division of the assets of the partnership or a valuation thereof. It was open to the partners to agree that the impugned amount was the value of the assessee's share in the partnership. Section 47(ii ) was, therefore, attracted. Case referred to CIT v. H.B. Aslot [1978] 115 ITR 255 (Bom.). G.S. Jetley, A. Shelat, S.G. Aney and Miss S.G. Shah for the Applicant. C.J. Thakkar and N.J. Thakkar for the Respondent. JUDGMENT Bharucha, J.-Rule has been issued in this application under section 256(2) of the Income-tax Act, 1961 ('the Act') made at the instance of the Commissioner. We do not propose to make the rule absolute for the reasons we now state. The questions proposed read thus: "1. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was correct in confirming the decision of the AAC holding that the amount of Rs. 15,000 received by the assessee was exempt under section 47(ii) of the Income-tax Act, 1961? 2. Whether the Appellate Tribunal was correct in holding that the amount of Rs.…

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