products and literature relating thereto. On the dissolution of the partnership, its· assets, which included goodwill, machiuery, furniture, medicines, library and copyright in respect of certain publications, were valued at Rs. 2,50,000. Since a large majority of assets was incapable of physical division, it was agreed that the assets be taken over by D and the respondent assessee be paid his share of the value of the assets iu money and accordingly he was paid Rs. 1,25,000/-. The question was whether the sum of Rs. 65,000/-, being part of the amount received by the respondent assessee could be brought to tax as capital gains under s. 12B(l) of the Act? Tbis Court held that the arrangement between the partners of the firm amounted to a distribution of the assets of the firm on dissolution, that there was no sa\e or exchange of the respondent's share in the capital assets to D, nor did he transfer his share in the capital assets and, therefore, the sum of Rs. 65,000/- could not be taxed as capital gaius. The Court observed that the rights of the parties were adjusted by l)andi.ng over to one of the partners the entire assets and to the other partner the money value of bis share and such a transaction was neither a sale nor exchange nor transfer of as~ets of the, firm.
