Appellate  Tribunal  in the appeal  ITA No.1700/Bang/2016  dt . 3-5 -2019  held that the amount received by the partner on settling the account in the firm is not taxable to tax .  In this MA the revenue has submitted that while in para 34 the Tribunal has upheld the action of the revenue authorities in taxing the excess paid over and above the sum standing to the credit of the capital account of the Assessee as capital gain has modified the computation of the capital gain by treating value of goodwill also as part of the credit in the partners capital account. According to the revenue, the value of Goodwill should not be considered as cost of acquisition or sum standing to the credit of the partners capital account because as per section 55(2)(a) of the IT Act, the cost of the goodwill has to be taken as nil. If this provision is applied the capital gain would be the same as calculated by the AO  . Dismissing the  petition the Tribunal held that  goodwill was not an asset which was subject matter of transfer and therefore the provisions of section 55(2)(a) of the Act will not apply. What was subject matter of transfer was right of partner in the partnership firm which comprises of several components, goodwill being one of the components. Apart from the above, we are also of the view that the issue that is sought to be agitated by the revenue in this miscellaneous petition is a highly debatable issue. The jurisdiction u/s. 254(2) of the Act confined only to rectifying mistakes that are apparent on the face of record. In the garb of an application u/s 254(2) of the Act, the assessee cannot seek a review of the order of Tribunal. There is no mistake apparent on the face of the record.  ( MA 123 of 2019 dt 28 -9-2020  ) (AY. 2008 -09)

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