My Client Mr. A is partner in a firm alongwith two other partners i.e. Mr. B and Mr. C. Now Mr. A wish to retire from the partnership and other partners agreed to this. After settling accounts upto date Credit Balance in the capital account of Mr. A ( Retiring partner) is Rs. 10 Lacs.
But also there is building in the firm and the retiring partner asks for appreciation of building also and the other remaining partners Mr. B and Mr. C agree to this and appreciation to building is mutually determined by the partners at Rs. 60 lacs. Thus share of the retiring partners comes to Rs. 20 Lacs.
The remaining partners agree to pay Rs. 20 lacs to the retiring partner by way of cheque from firm or may be from their own sources.
Now the Query is that :
Whether this appreciation of Rs. 20 lacs received by the retiring partner is Taxable in his hand or not.
NOTE:- 1. My Client is only Retiring partner i.e. Mr. A
2. Other two partners MR. B and C and Firm are not my client
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