1969 (3) TMI 7

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..... 1 of that year. By that time, one of the minors having become a major, he was taken as a full-fledged partner and the remaining minors continued to have the benefits of the partnership. One further change which is important for the reference was that the assessee was allotted a one-ninth share out of the one-third share and the balance of two-ninths share was distributed as between two other partners. The Gift-tax Officer treated the distribution of the two-ninths share is a gift, which was valued at Rs. 52,518 and charged to gift-tax. The Appellate Assistant Commissioner did not share that view and held that there was no transfer of any existing right in movable or immovable property. He took that view because the Gift-tax Officer had valu .....

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..... udes any interest in property, movable or immovable. The definition of transfer of property gives a wider scope and content to that phraseology so as to include, inter alia, the grant of partnership or interest in property and also " any transaction entered into by any person with intent thereby to diminish directly or indirectly the value of his own property and to increase the value of the property of any other person. " Property, be it movable or immovable, is a bundle of rights and a transfer can possibly be of that bundle or one or more rights comprised in the bundle. If grant of partnership amounts to transfer of property, logically we do not see why the distribution of two-ninths share out of the one-third share of the assessee is an .....

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..... hargeable to tax. Mr. Rajappa, for the assessee, contends that a right to share in future profits is not an existing right and that in fact even an interest of a partner in the firm is not a specific right or a right to specific property or asset of the firm and the right eventually of a partner is to share the profits of the firm at dissolution. He invited our attention to A. Narayanappa v. B. Krishnappa, Commissioner of Gift-tax v. Getti Chettiar and the judgemen in T.C. No. 52 of 1965. We do not think that Mr. Rajappa's contention is really to the point. A. Narayanappa v. B. Krishnappa was concerned with the inadmissibility of a certain document for want of registration and it was in that connection the Supreme Court held that the righ .....

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