RAMAN LAL KHANNA Vs. COMMISSIONER OF INCOME-TAX

JUDGEMENT

(1.) AT the instance of the assessee the Income-tax Appellate Tribunal, Delhi Bench 'c', referred the following question of law for our opinion under Section 256 (1) of the Income-tax Act, 1961:

(2.) THE dispute that has arisen in this reference relates to the assessment year 1965-66, corresponding to the previous year ending 31st March, 1965. The assessee is Ramanlal Khanna. He was the partner of M/s. Kohinoor Textile Printing Works, Bombay. The three other partners in this partnership were Brij Lal Khanna, Sharad Chand Khanna and Lajpat Rai Mehra. This partnership was dissolved under a deed of dissolution dated October 1, 1964. The assessee and the two other partners retired from the said firm. They received their respective shares on dissolution from the fourth partner who took over the entire partnership concern. On revaluation of the assets a credit of Rs. 30,000 was given to the assessee on October 1, 1964, being the share in the increase on the revaluation of the building and land, etc. , on the date of his retirement. This amount of Rs. 30,000 was treated as capital gain by the Income-tax Officer. The Appellate Assistant Commissioner, though agreeing with the decision in Bankey Lal Vaidya v. Commissioner of Income-tax, [1965] 551. T. R. 400 (All) all the same affirmed the decision of the Income-tax Officer. The assessee then preferred a second appeal to the Appellate Tribunal. The Tribunal rejected the appeal basing itself on the decision of the Supreme Court in James Anderson v. Commissioner of Income-tax, [1960] 39 I. T. R. 123; [1960] 3 S. C. R. 160 (S. C. ).

(3.) THE entire decision of this controversy depends on the true interpretation to be put on sections 45 and 47 of the Act. They are reproduced below for facility of reference: