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TMI Blog1986 (2) TMI 103X X X X Extracts X X X X X X X X Extracts X X X X ..... cent. The capital contributed by the five partners and the share of each partner were as under : Capital Share Rs. P. Vasudeva Kamath 30,000 15 per cent P. Ganapathy Kamath 50,000 25 per cent S. Ravindranath Pai 50,000 25 per cent S. Rajendranath Pai 50,000 25 per cent P. Gurudatha Kamath 20,000 10 per cent The GTO was of the view that the voluntary relinquishment of the assessee's share was a transfer of property as the other partners got right to share in the future profits of the firm as also the share of goodwill. He computed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... As pointed out already the two incoming partners have contributed capital of Rs. 50,000 and Rs. 20,000, respectively. On account of their joining the firm the share of the existing partners were reduced. The contribution of the capital by the incoming partners is adequate.consideration. There is no transfer of any asset involved by reducing the assessee's share by 18 1/3 per cent. Thus, there is no gift involved. In a partnership, when new partners are introduced in an existing firm such new partners not only have a share in the profits of the firm but subject to the contract to the contrary may be liable to share the losses of the firm. They may have to contribute the capital or they may be taken as working partners. When they contribute c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assets and the properties of the assessees which were transferred to the partnership pertaining to his property business as a gift nor has any suggestion been made before us on behalf of the revenue that the property and assets valued at Rs. 4,00,000 were subject-matter of the gift. All that the departmental authorities did and position continued throughout was that they picked up one of the assets of the assessee's proprietary business, namely, its goodwill, and regarded that as the subject of the gift having been made to the daughters who were other partners of the firm which came into existence by virtue of the deed of partnership. This approach is wholly incomprehensible and no attempt has been made before us to justify it ..." 7. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irstly, in that case the contribution of the capital of Rs. 6,000 was found to be inadequate for giving share of 20 per cent. The Tribunal directed the GTO to take the value of the gift at 10 per cent instead of 20 per cent taken by him. Even this order on those facts would go to show that contribution of capital by new partners in proportion with others is adequate consideration. We may point out that the decision of the Kerala High Court in V. M. Philip's case was not considered. Hence, that order is distinguishable. 8. On careful consideration of the entire facts, in our view, the new partners have contributed sufficient capital in proportion to their shares, compared with the shares of other partners and that would constitute adequate ..... X X X X Extracts X X X X X X X X Extracts X X X X
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