Capital gain u/s 45(4) & Retirement of partners of firm

Capital gains—Applicability of s. 45(4)—Retirement of partners of firm—When a partner retires from a partnership and his share in the net partnership assets is determined and allotted to him, what he receives is his share in the partnership and not any consideration for transfer of his interest in the partnership to the continuing partners—Transfer of a capital assets in order to attract capital gains tax must be one as a result of which consideration is received by the assessee or accrues to the assessee—When a partner retires from a partnership he receives his share in the partnership and this does not represent consideration received by him in lieu of relinquishment of his interest in the partnership asset—That apart, assessee firm was originally a sole proprietorship concern started by NM—Two daughters and two sons-in-laws of NM were subsequently admitted as partners and on division of the assets, it can also be arguably pointed out that one daughter and one son-in-law were allotted a share which they were otherwise legally entitled to out of the holdings of NM

NATIONAL COMPANY vs. ASSISTANT COMMISSIONER OF INCOME TAX

(2019) 3 NYPCTR 346 (Mad)