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TMI Blog2002 (10) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tribunal and remit the matter to the Tribunal for fresh disposal in accordance with law - - - - - Dated:- 24-10-2002 - Judge(s) : G. SIVARAJAN., K. BALAKRISHNAN NAIR. JUDGMENT The judgment of the court was delivered by G. SIVARAJAN J.-These two references at the instance of the Revenue arise from a common order of the Income-tax Appellate Tribunal, Cochin Bench, in G.T.A. Nos. 15 and 16/Coch. of 1987 in respect of the assessment years 1975-76 and 1976-77. I.T.R. No. 81 of 2000 arises from G.T.A. No. 15/. Coch. of 1987 for 1975-76 and I.T.R. No. 315 of 1997 arises from G.T.A. No. 16 Coch. of 1987 for the assessment year 1976-77. The question referred by the Tribunal pursuant to the direction issued by this court in the judgm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re stipulated in the partnership deed. As per the partnership deed the assessee-company was entitled to 10 per cent. of the profit of the partnership firm. The Assessing Officer, viz., the Gift-tax Officer, Ernakulam, has taken the view that in the process of transfer of the assets of the company in favour of the partnership firm there was a gift to the extent of 90 per cent. The assessing authority has also calculated the gift on the basis of the previous three years' profit totalling Rs. 38,21,450 and by deducting 10 per cent. representing the assessee's share, 90 per cent., i.e., Rs. 34,39,305 was taken as the gift made by the assessee in favour of the firm. Before the first appellate authority the assessee raised two contentions: (1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nior counsel submitted that the Tribunal has confirmed the order of the first appellate authority relying on the decision of the Supreme Court in Sunil Siddharthbhai's case [1985] 156 ITR 509 and that a Division Bench of this court in CGT v. Sree Narayana Chandrika Trust [2001] 248 ITR 275 has held that the principles laid down by the Supreme Court in the decision in Sunil Siddharthbhai's case [1985] 156 ITR 509 were in connection with capital gains under section 48 of the Act and that the said principles cannot be imported to a case of gift. Senior counsel accordingly submitted that the finding of the Tribunal that there is no gift involved in the transaction cannot be sustained. Senior counsel further submits that the findings of the Trib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ration. It is also seen that the first appellate authority has entered a finding that the gift is exempted under section 5(1)(xiv) of the Act as according to it, the transaction was with a view to carrying on the business in a better manner. The Tribunal has also entered a finding in paragraph 18 of the appellate order to the effect that the arrangement was made in business interest. After a close reading of the orders of the authorities including the Tribunal, we are of the view that all the authorities have failed to ascertain the relevant basic facts necessary to adjudicate the question whether any gift is involved in this case, i.e., the worth of the assets which was brought in by the assessee, the worth of the assets and/or considerati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exigible to tax. The Karnataka High Court in D.C. Shah v. CGT [1982] 134 ITR 492 considered a case of a reconstitution of a partnership firm by inducting the son of one of the partners as a new partner and the share of the father was reduced. A further reconstitution of the partnership firm with four new partners and four minors were admitted to the benefits of the partnership was made evidenced by a new partnership deed. The shares of the existing partners were also reallocated. The incoming partners and the minors admitted to the partnership also contributed to the capital of the firm and the new partners agreed to work for the firm. The Karnataka High Court held that since there was capital contribution by the incoming partners and by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atio in a firm can vary for a number of reasons, among them the ability of the partners to, devote time to the business of the firm. The gift of a part of a partner's share to another partner has to be established by relevant evidence. The onus of doing so is on the Revenue. It has not been discharged in the present case." A Division Bench of this court in CGT v. H. Subramanian, Bhima Jewellers [1999] 236 ITR 143 also considered the question of sufficiency of the consideration and on finding that there was no proper consideration of the same remanded the matter back to the Tribunal for fresh consideration. Senior standing counsel also relied on a decision of the Supreme Court in Salem Cooperative Central Bank Ltd. v. CIT [1993] 201 ITR 69 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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