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TMI Blog2002 (8) TMI 80X X X X Extracts X X X X X X X X Extracts X X X X ..... d dated September 6, 1976, there is a gift by each of the erstwhile partners (assessees) in favour of the incoming partner, Asoka Betelnut Co. Pvt. Ltd., attracting levy of tax as held by the Gift-tax Officer?" - In this case, even though there is capital contribution by the newly inducted partner, the extent of the contribution has been found to be not commensurate with the value of the benefit c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... telnut Co. Pvt. Ltd., attracting levy of tax as held by the Gift-tax Officer?" A firm which consisted of three partners was reconstituted on September 6, 1976, by admitting a company as the fourth partner and in which company the other three partners held substantial shares. The firm owned a running business as also valuable fixed assets in the form of buildings. The shares in the firm prior to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of the rights held by the three partners in favour of the newly inducted partner to the extent of the eighteen per cent. share given to the newly inducted partner, did not truly reflect the value of the firm's assets vis-a-vis the new partner's capital contribution and that there was a gift to the company. While computing the amount of the gift, the Assessing Officer had the value of the bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the shares of the continuing partners, a gift resulted in favour of the newly inducted partner to the extent of the excess share given to that newly inducted partner in the assets of the firm. The question on principle does not admit of any answer other than one in favour of the Revenue. The Supreme Court has held and this court also has held in several cases that when there is a diminution in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of M. K. Kuppuraj [1985] 153 ITR 481 (Mad), relinquishment by the partners of a portion of their shares in favour of the minor admitted to the benefits of the partnership with out consideration was held to constitute a gift. In this case, even though there is capital contribution by the newly inducted partner, the extent of the contribution has been found to be not commensurate with the value o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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