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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 ..... ect 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 new partnership deed was executed on November 9, 1961, between the respondent-assessee, Gunvantlal Chhotalal and Ramniklal Chhotalal. According to this new partnership deed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve 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 liability under the Gift-tax Act, there should be transfer of existing movable or immovable property. In the opinion of the Tribunal, the right to share future profit was a fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 of Mr. Kaji, we refer to a few of the relevant provisions of the Gift-tax Act. Section 2(xii) of the Gift-tax Act defines what is a "gift". It reads as under: 2. Definit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anner 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 equivalent to seven annas in a rupee) he diminished to that extent the value of his own property and releases or abandons the same in favour of the minors and to that extent it is a transf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 of the firm. They are admitted to the benefits of partnership with the consent of all the partners. It, therefore, cannot be said that when a firm is reconstituted and as a result of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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