Sir I have one query Assessee is a Partnership Firm consisting of Five partners from different family . One partner having 20% share is willing to retire and remaining partners will continue business . Capital of retiring partner is 50 lac And Net Asset value of the firm is 5 cr. If firm gives only Rs 50 lacks i.e. outstanding capital amount to retiring partner. Than there will be no tax under provision of Section 9B and 45(4). As partners are from different family is other provision of the Act will have effect. Like section 56 or no adequate consideration. Whether it will be considered as deemed gift for other partners.

 Reply: When the partner had given only a lying amount in the capital account, as per the partnership agreement, the following ratio shows that in ACIT v. Mohanbhai Pamabhai, that this amount will not be subject to the capital gains tax and it represents only the existing interest of the partner before retirement. 

When the partner gives the excess amount which was reflecting in their respective capital account, that amount may be paid to the respective retiring partners to enable them to release their contribution in the partnership firm and transfer their rights which will be subject to the capital gains tax.

Provision of section 56(2) is not applicable in this case. If any property is taken as a consideration at a value less than the circle value the same shall be taxable u/s 50C.