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TMI Blog1973 (10) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... of M/s. Chhotalal Vadilal. There were two other partners besides the respondent-assessee. A partnership deed of November 12, 1958, was executed between the partners in respect of the said partnership business. According to the said partnership deed, the respondent-assessee had seven annas interest whereas the other two partners, namely, Shri Gunvantlal Chhotalal and Shri Pravinchandra Vadilal, had four annas and five annas share, respectively, in the profit and loss of the partnership business. It appears that this partnership continued till the assessment year 1962-63. However, from the beginning of S.Y. 2018, relevant to the assessment year 1963-64, with which we are concerned here, there was a change in the constitution of the firm. A n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned Appellate Assistant Commissioner held that though there was no gift in respect of the share of the respondent-assessee in goodwill, there was gift of the right to receive future profits in favour of the minors, Kiritkumar and Deepakkumar. He, therefore, proceeded to value the said right and ultimately determined the value of gift at Rs. 1,44,247. The, respondent-assessee, therefore, went in appeal before the Tribunal. The Tribunal confirmed the view of the Appellate Assistant Commissioner that there was no gift of the share of the respondent-assessee in the goodwill. It then proceeded to examine the definition of " gift" under the Gift-tax Act and was of the opinion, having regard to the said definition, that in order to attract the li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... minor sons of Chhotalal were admitted to the benefits of partnership, the result was that the share of Chhotalal, respondent-assessee herein, was reduced from 44 paise in the profits of the said old partnership business to 25 paise in the new partnership business and the value of his property was diminished. Consequently and to that extent, therefore, there was a transfer of property which would be included within the definition of the term " gift " under section 2(xii) of the Gift-tax Act. In the submission of Mr. Kaji, therefore, the Tribunal was in error in holding that there was no transfer of any existing movable property and what was transferred was only the right to receive profits in future. In order to appreciate this contention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts to include certain transfers.-For the purposes of this Act -....... (d) where a person absolutely entitled to property causes or has caused the same to be vested in whatever manner in himself and any other person jointly without adequate consideration and such other person makes an appropriation f rom or out of the said property, the amount of the appropriation used for the benefit of the person making the appropriation or for the benefit of any other person shall be deemed to be a gift made in his favour by the person who causes or has caused the property to be so vested. It was, therefore, urged that if by the reconstitution of the firm, the respondent-assessee has reduced his share by accepting 25% instead of 44% (which is equiva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... property of any person. We, therefore, cannot uphold the contention of Mr. Kaji that to the extent to which as a result of the reconstitution the share of the respondent-assessee was reduced, to that extent there was a relinquishment or abandonment of any interest in the property. The partnership has been defined under section 4 of the Partnership Act as the relation between persons who have agreed share the profits of a business carried on by all or any of them acting for all and the partners who have entered into partnership with one another are called individually " partners " and collectively " a firm ". It should be noted that the minors when they were admitted to the benefits of a partnership did not become by themselves the partners ..... X X X X Extracts X X X X X X X X Extracts X X X X
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