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TMI Blog1978 (1) TMI 87X X X X Extracts X X X X X X X X Extracts X X X X ..... s and took half of it as the value of the gift, the subject-matter of the gift being the right to share 50 per cent of the profits of the business. Then he considered that Rs. 1 lakh, the capital provided by the donee-partner as the consideration for the transaction. So the excess over the consideration viz; Rs. 44,787 was treated as a deemed gift and brought to tax. There was no appeal or revision by the assessee. 3. Thereafter, the Commissioner of Gift-tax interfered on the ground that the treatment of Rs. 1 lakh as consideration for the transaction is prejudicial to the interests of Revenue. According to the Commissioner there is no consideration at all because according to him nothing was paid by the son to the father for getting the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other person has done, or abstained from doing, or does or abstains from doing or promises to do or to abstain from doing something, such act or abstinence or promise is called a consideration for the promise". So to constitute consideration the promisee-donee-son partner need only at the desire of the promisor-father do something or abstain from doing something. So when he contributed the capital he does something at the desire of the father-promisor, that is, in law the consideration for the surrender of the right to share 50 per cent of the profits. 5. It is stated at p. 176 of the Law of contract in India A Comparative Study) by Mr. V.G. Ramachandran, Vol. 1, as follows:- "Consideration may be given to the promisor or to some other p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... firm. In Indian Partnership Act by O.P. Aggarwalas, Sixth Edition (1965), at p. 174 there is a definition about the meaning of "capital", which is extracted below: "By the capital of the partnership is meant the aggregate of the sums contributed by its members for the purpose of commencing or carrying on the partnership business and intended to be risked by them in that business. The capital of a partnership is not, therefore, the same as its property; the capital is such as fixed by the agreement of the partners; while the actual assets of the firm vary from day to day and included everything belonging to the firm and having any money value". 7. In Law of Partnership by S.T. Desai, Third Edition, at page 66 there is a definition about t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has risked that money in that business. So the donee by contributing Rs. 1 lakh as capital to the business of the partnership has suffered a detriment. So that detriment is sufficient to constitute the consideration in a transaction like this. So there is consideration for the gift. 9. The next question is what is the value of this consideration. It needs no further discussion to conclude that it is Rs. 1 lakh itself because it is the amount which the donee had put into the business and risked it in the adventure of business. So, in this case, there is consideration of Rs. 1 lakh for the gift. Only the value of the subject-matter of the gift, if any, in excess of the consideration of Rs. 1 lakh, therefore, forms the taxable gift within the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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