Relinquishment amount received from partnership firm for relinquishing share in partnership - whether a long term capital asset and deduction under section 54F will be available?

Facts:

Assessee was a partner in a firm since 2007. He received amount on relinquishing his share in the firm and invested the same in residential house property and claimed deduction under section 54F. This was not acceptable to lower authorities. On higher appeal by assessee -

Held in favour of the assessee that the relinquishment of rights in a partnership firm was indeed a long term capital asset taxable under section 45(4) and thus was eligible for reinvestment benefit under section 54F as well.


Ed. Note: In this case the firm was also owning lands which was not a depreciable block of asset and surplus on this was also credited to partners capital account prior to relinquishment/retirement thereto. Nonetheless of this fact the amount taxable under section 45(4) was eligible for benefit of section 54F.

Case: Bipinbhai V. Patel v. ITO 2023 TaxPub(DT) 6390 (Ahd-Trib)