Per B. Ramakotaiah, Accountant Member. - This is an appeal by the assessee against the order dated 12-1-2010 of CIT(A)-37, Mumbai, relating to assessment year 2007-08.

2. Ground Nos. 1 to 4 raised by the assessee read as follows :

(1)Learned CIT(A) erred in law and on facts in upholding the action of the Assessing Officer that the amount received by the appellant on retirement from partnership firm M/s. D.S. Corporation is taxable under the head ‘capital gains’ on the mistaken belief that ‘retirement from partnership’ amounts to ‘transfer’ within the meaning of section 2(47) of the Income-tax Act.

(2)Learned CIT(A) failed to appreciate the facts of the case and the relevant law on the subject.

(3)Learned CIT(A) erred in not following the judgment of Supreme Court and of the jurisdictional Court.

(4)Learned CIT(A) erred in constructing the deed of retirement, under which no transfer had taken place and without transfer there can be no capital gains tax liability.

3. The assessee is an individual. The assessee and one Mr. Rakesh Kumar Wadhwan were desirous of carrying on business of development and construction in partnership with each other of a property situate at Juhu Tara Road, Juhu, bearing S. Nos. 28A and B1, Plot No. 2 and bearing CTS Nos. 956, 956/1 to 956/83 of Village Juhu, Taluka Andheri, within the registration district of Andheri, district Mumbai suburban, Greater Mumbai, admeasuring 14,022 square yards i.e., 11,723.79 square meters, consisting of land and buildings and structures occupied by tenants standing thereon formerly known as Perieira Estate and later known as Unity Compound, hereinafter referred to as "the Property". They entered into a partnership under a deed of partnership dated 1-8-2005 for the aforesaid purpose. The partnership deed refers to the fact that the assessee and Mr. Rakesh Kumar Wadhwan have been carrying on business as builders and developers of several immovable properties in the name and style of several firms, companies and concerns for the past many years and were desirous of carrying on business of development of property in partnership. The name of the firm so formed was M/s. D.S. Corporation.

4. As per the said partnership deed, the profit-sharing ratio was as under :—

As per clause 7 the said partnership deed, Shri Rakesh Kumar Wadhwan was required to contribute 80% of the capital requirement and Shri Sudhakar M. Shetty (the assessee) was required to contribute 20 per cent of the capital requirement. On 16-9-2005, another deed of admission-cum-partnership of partners was executed admitting Smt. Hemlata S. Shetty as partner of the firm. The revised profit-sharing ratio were as under :—

5. On 23-9-2005, the firm M/s. D.S. Corporation purchased from one Mr. Percival Joseph Pereira the property for a consideration of Rs. 6.50 crores. The said plot was occupied by 81 tenants. The Stamp Duty Officer valued the property at Rs. 6,50,00,000 and the stamp duty was paid on the basis of the said valuation. The conveyance was duly registered.

6. On 26-9-2005, another deed of admission-cum- reconstitution of partnership was executed. The following partners were admitted to the partnership :—

(1)Prithvi Realtors & Capital Private Limited

(2)Shri Sarang R. Wadhwan

After their admission to the partnership, the profit-sharing ratio of the firm was revised as under :—

As per clause 8 of the said deed, the capital of the partnership business was to be contributed by the partners in the following proportion :