No Tax on Amount received by a partner on his retirement from firm

Pr. CIT Vs Smt. Hemlata S Shetty (Bombay High Court)

Amount received by a partner on his retirement and the partnership firm is not subjected to tax in the retiring partner’s hands in view of Section 45(4) of the Act. The liability, if any, to pay the tax is on the partnership firm in view of Section 45(4) of the Act. Besides, the duration of a person being a partner in the firm does not decide the applicability of Section 45(4) of the Act, as it is not so provided therein.

FULL TEXT OF THE HIGH COURT ORDER / JUDGMENT

1 This Appeal under Section 260A of the Income Tax Act, 1961 (Act) challenges the order dated 01/12/2015  passed by the Income Tax Appellate Tribunal (“the Tribunal”  for short).   This Appeal relates to Assessment Year 21006­2007.

2 Although   multiple   questions   have   been   raised   in   the   memo   of appeal, the essence of these questions  is in the following question pressed by the Revenue :­

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