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TMI Blog1980 (6) TMI 58X X X X Extracts X X X X X X X X Extracts X X X X ..... ing been reduced from 66 per cent to 46 per cent, there was a gift to that extent in favour of Sh. Tilak Raj. On that view, the GTO issued a notice under s. 16(2) of the GT Act requiring the assessee to show cause why he should not be assessed to Gift-tax. In reply, the assessee pleaded that there was no gift made by him in favour of his second son, Shri Tilak Raj, on his introduction as a partner and in any case even if there was a gift, the same was exempt under s. 5(1) (xiv) of the GT Act because the assessee was old and due to his failing health was unable to cope with the business and consequently Shri Tilak Rah was introduced as a working partner. The GTO observed that it was not borne out from the record that the assessee was ill and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cision of the Madras High Court in 73 ITR 761(1). He further submitted that the decision of the Gujarat High Court was distinguishable on facts. It was also submitted that the decision of Supreme Court would not apply to the facts of the present case. 5. The assessee's ld. counsel relied on the order of the AAC and the decision cited by him, both before the GTO and the AAC and submitted that the Madras High Court has in a subsequent decision reported as 110 ITR 237 held in similar circumstances that the gift was exempt under s. 5(1)(xiv) of the Act. The learned counsel, however, laid great stress on the other aspect of the case that no gift at all was involved in the present case because Shri Tilak Raj was taken as a working partner due ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court in CGT vs. Karnaji Lumbaji (2). IT was held that even if there was a transfer by the assessee of his 19 np. Share in the firm to M and G, the transfer was not without consideration in money or money's worth and there was no gift by the assessee to M and G which would attract the liability to gift-tax under the Act. It appears that the Madras High Court struck a discordant note in 73 ITR 761, but when two opinions are possible on the same point, one in favour of the tax payer has to be preferred in view of the decision of the Supreme Court in the case of Vegetable Products Ltd. (8). Therefore, we would prefer to follow the decision of the Bombay and Gujarat High Courts and agree with the AAC that no gift was involved on the facts and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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