Tax Treatment on dissolution

Dear Shailly,

Excess sum received on retirement is not taxable in the hands of partner

Payment to retiring partners does not involve ‘transfer’ - Where on the retirement of a partner from a firm, he was paid his share in the partnership which was worked out by taking the proportionate value of his share in the net partnership assets after deduction of liabilities and prior charges, and including therein the proportionate share in the value of goodwill, it was held that no part of the amount received was assessable as capital gains - Addl. CIT v. Mohanbhai Pamabhai /CIT v. Bhupinder Singh Atwal /CIT v. P.H. Patel /CIT v. N. Palaniappa Gounder/CIT v. Madan Lal Bhargava /CIT v. P.N. Sreenivasa Rao /Addl. CIT v. Smt. Mahinderpal Bhasin