COMMISSIONER OF INCOME TAX JAI vs. H K PODDAR JAIPUR

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ITR/30/1998HC RajasthanRJHC02005618199809 July 2009Bench: PARIHAR ASHOK,K.S.CHAUDHARI2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the Appellate Tribunal was right in its conclusion. The Court referred to the Supreme Court's decision in Commissioner of Income-Tax Vs. D.P. Sandu Bros. Chembur P. Ltd., 273 ITR 1 (SC). In that judgment, the Supreme Court held that the surrender of a capital asset and the receipt thereof cannot be treated as a casual or non-recurring receipt under Section 10(3) of the Act, and thus could not be included in income for tax assessment. Applying this precedent, the High Court found that the amount received by the assessee on retirement could not be taxed. The questions referred by the Tribunal were answered in favor of the assessee, and the income tax reference was disposed of accordingly.

What were the facts?

This case involves an Income Tax Reference filed by the Commissioner of Income Tax, Jaipur, against Shri H.K. Poddar. The dispute concerns an amount of Rs. 5 lacs received by the assessee upon his retirement from a partnership firm. The Income Tax Appellate Tribunal had previously held that this sum was not chargeable to tax. The Commissioner challenged this decision, leading to the reference to the High Court. The core of the matter is whether the Rs. 5 lacs received by the assessee at the time of his retirement from the partnership could be treated as taxable income under the Income Tax Act.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the sum of Rs. 5 lacs received by the assessee at the time of his retirement from partnership was not income chargeable to tax? (Question of law) 2. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the amount of Rs. 5.00 lacs received by the assessee at the time of his retirement from the partnership, could not be taxed as casual income? (Question of law, turning on Section 10(3)) Assessee's contention: The assessee argued that the amount received on retirement was not casual income and, relying on various Supreme Court judgments, was not taxable. The Tribunal had accepted this position. Revenue's contention: The Revenue challenged the Tribunal's finding that the Rs. 5 lacs was not taxable income and that it could not be taxed as casual income.

Which sections of the Income-tax Act were involved?

Section 10(3)

AI-generated summary — verify with the full judgment below

[1] IT REFERENCE 30/1998 IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR. O R D E R D.B. INCOME TAX REFERENCE NO. 30/1998 THE COMMISSIONER OF INCOME TAX, JAIPUR Vs. SHRI H.K. PODDAR Date: 09.07.2009 HON'BLE MR. JUSTICE ASHOK PARIHAR HON'BLE MR. JUSTICE K.S. CHAUDHARI Mr. Anuproop Singhi on behalf of Mr. J.K. Singhi, Advocate for the petitioner. Mr. T.C. Jain, Advocate for the respondent.

**** The Income Tax Appellate Tribunal vide order dated 13.10.1997 made the following reference to this Court:- “(1) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the sum of Rs. 5 lacs received by the assessee at the time of his retirement from partnership was not income chargeable to tax? (2) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the amount of Rs. 5.00 lacs received by the assessee at the time of his retirement from the partnership, could not be taxed as casual income?” The dispute is in regard to the amount of Rs.5 lacs received by the assessee on his retirement as partner from the Firm. The question is whether the amount so received, can be treated as income to be taxed under the Act. The Tribunal relying on various judgments of the Supreme Court, held that on retirement from the firm the assessee had

[2] IT REFERENCE 30/1998 relinquished all his right, title and interest in the firm receiving a lumpsum amount from the source and the same can not be treated as casual income. Be that as it may, the Supreme Court recently in the case of Commissioner of Income-TAx Vs. D.P. Sandu Bros. Chembur P. Ltd., 273 ITR 1 (SC), has held that surrender of the capital asset and the receipt thereof cannot be treated as a casual or non-recurring receipt under Section 10(3) of the Act, thus, could not be included in the income for the relevant year for tax assessment. In view of the judgment referred above by the Supreme Court, in our opinion, the Tribunal was right in holding that the amount received by the Assessee on his retirement cannot be taxed. The questions referred by the Tribunal are answered accordingly and the income tax reference also stands disposed of. A copy of this order be sent to the Tribunal. (K.S. CHAUDHARI),J. (ASHOK PARIHAR),J. /KKC/

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