- (1.) This appeal under Section 260A of the Income Tax Act, 1961 (in short, 'the Act') is directed against the order dated 11.01.2000 passed by the Income Tax Appellate Tribunal, Chandigarh Bench (in short, 'the Tribunal') in ITA No.673 & 675 of 1972-73 pertaining to the Assessment Year 1967-68. The following substantial question of law was formulated while admitting this appeal:- "Whether under the facts and circumstances of the case the Tribunal was justified that in case of dissolution of the firm where a lumpsum consideration is being paid to the outgoing partners and in the present case being Rs.10 lacs for all the moveable and immoveable assets and other rights etc. Rs.4 lacs be estimated as revenue receipts as an income of the outgoing partners in lieu of future profits in the ratio of their shares which will be paid at Rs.1 lac in the hands of Shri Mahavir Prasad and Rs.75,000/- in the hands of Shri Sukhbir Prasad."
(2.) The case has a chequered history. The two appellants were amongst the eight partners who constituted the parternship firm M/s Kewal Ram Ujaggar Sain vide deed dated 30.06.1951. The appellants and two other partners retired from the partnership on 19.01.1967 on receipt of Rs. 10 lacs which were to be divided amongst the retiring partners as per their shares held in the partnership. The first appellant (Mahavir Prasad Jain) received '2.50 lacs and the second appellant Sukhbir Prasad Jain (deleted from the array of appellants vide order dated 04.02.2001) received '1.87 lacs. The balance amount went to the share of other two retiring partners. The remaining four partners executed an instrument of Partnership on 28.01.1967. Thereafter, the four retiring partners (including the appellant) as well as eight partners of the re-constituted firm and one Smt. Sarupi Devi executed a Memorandum of Settlement whereby the terms of the oral agreement regarding retirement of four outgoing partners were recorded.
(3.) The appellants' case was that '2.50 lacs and '1.87 lacs received by them represented the value of their share in the assets of the partnership firm. The Assessing Officer (AO) did not accept that claim of the Assessees though allowed their plea in part to the extent that the received amount also included the value of Assessee's share of firm's goodwill. The AO estimated the value of firm's goodwill as on 19.01.1967 at Rs. 50,000/- and Rs. 37,500/-, falling to the share of two appellants respectively while balance were treated as their profits and gains from the business.;