JUDGMENT

Akil Kureshi, J. - This appeal is filed by the Revenue to challenge the Judgment of Income Tax Appellate Tribunal ("ITAT" for short). Following question was presented for our consideration:

"Whether in law and on the facts of the instant case, was the Tribunal correct in holding that there was no transfer of capital asset by way of distribution at the time of making payment to the retiring partners".

2. Brief facts are as under.

(I) Respondent assessee a partnership firm, had filed return of income for the assessment year 20102011. The assessee was engaged in manufacturing of tube light fittings and other lighting accessories for over 13 years. The firm was constituted under Partnership Deed dated 16/11/1996, originally consisting of two partners. On 15/01/2010, constitution of the firm underwent a change under a Deed of Reconstitution of partnership. Three new partners were admitted. On 16/01/2010, another Deed of Retirement cum Reconstitution of the partnership was executed by which the original two partners retired from the firm and the remaining three partners redistributed their share in a partnership firm. The partnership created a goodwill account and a sum of Rs. 3.