9911796707
TMI Blog1985 (7) TMI 175X X X X Extracts X X X X X X X X Extracts X X X X ..... re capital of the firm of Rs. 5,000 was contributed by Smt. Vijayalakshmi. The other partners Shri Shanmugham Chettiar was required to manage the business for which he was paid a salary of Rs. 200 per month. None of the minors admitted to the benefits of partnership contributed any capital. As per the agreement of partnership the adult partners had 20 per cent the 15 per cent share of profit while 65 per cent of the share was allotted to the minors. On these facts, the GTO held that the two adult partners had made a gift to the minors admitted to the benefits of partnership as there was no consideration for conferring such benefit. Rejecting the objections of the assessee in this connection, he estimated the value of the total gift made by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1969) 73 ITR 761 (Mad) the right of a partner to share in the profits of a firm is property and any transaction which reduces the share of a partner in favour of anyone else without consideration amounts to a transfer of such right and consequently a gift. It is further pointed out that the contention of the assessee in that case M. K. Kuppuraj vs. CGT (1984) 38 CTR (Mad) 314 : (1985) 153 ITR 481 (Mad) that the transfer of a right to future profits cannot be taken to be gift at all because no property in praesenti is transferred and that it is not possible to estimate the future profits for the purpose of valuation of gift, if any, had been rejected. It is therefore argued that if the right to share any future profits where the future profi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... share of profits specified in the partnership agreement and to nothing more. It is not a case where an adult partner had already a particular share and subsequently by admitting the minors to the benefits of partnership his share got reduced with the corresponding benefit going to the minors. It is therefore difficult to say that the two adult partners had already an existing right to future share of profits in regard to share allotted to the minors which they had foregone in favour of the minors. No material has been placed before us on behalf of the Department that the minors had any other right in any property or assets which originally belonged to the adult partners. Secondly, it is difficult to conceive of a right to share further pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stence with specific shares of each partner including the minors admitted to the benefits of partnership, it is difficult to say that the adult partners have a right to any higher share of profit and had relinquished the difference in favour of the minors. 5. Lastly, even assuming that the admission of the minors and the conferment of the shares on them amounts to gift made by the two partners, it is not possible to evaluate it because there is no date or material available to assertion or determine the value of such right because there is no history of the firm having made any profit in the past. The value that has to be assigned to the gift, if any, is the value on the date of gift, which in this case would be the very date of commencem ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
