Satish Chandra, J.

1. MESSRS. Gulab Singh Anand and Sons was a partnership firm constituted under a deed dated October 1, 1.962. It consisted of three partners, one of whom was Smt. Mahinderpal Bhasin, the assessee, in the present case. The firm carried on business of supplying various commodities to the Defence Services. The accounting period of the firm ended on September 30 each year, Smt. Mahinderpal Bhasin, one of the partners, retired from the firm with effect from October 1, 1967. The remaining two partners continued the business. A deed of retirement was executed on October 1, 1967, under which the assessee was paid her share of the capital and her share of profits up to the date of retirement and also a sum of Rs. 20,000 as consideration, for relinquishment of her interest in the partnership firm.

2. ON October 3, 1968, Smt. Mahinderpal Bhasin filed a return for the assessment year 1968-69. In it she showed receipt of Rs. 20,000 as capital gains. The ITO held that the sum of Rs. 20,000 received by her as consideration for relinquishment of her interest in the partnership, in law, was a revenue receipt. He brought it to tax as such.

The assessee appealed. The AAC he