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TMI Blog2000 (11) TMI 88X X X X Extracts X X X X X X X X Extracts X X X X ..... are to be shared equally by the partners. The Gift-tax Officer took the view that the transfer to the children represented gift made by the assessee and determined the value of the gift at Rs. 3,48,860 and the gift-tax payable was determined as Rs. 69,465. The assessee filed an appeal before the Commissioner of Income-tax, (Appeals). The appellate authority relied on the decision of the Karnataka High Court in CGT v. C. S. Patil [1989] 180 ITR 97 and held that since there has been contribution to the capital by the new partners, there was no gift. Against that, the matter was taken before the Tribunal by the Revenue. The Tribunal also relied on the decision of the Karnataka High Court and dismissed the appeal. It is, thereafter, that thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re the Tribunal was whether there was a gift or not. The adequacy or inadequacy of the consideration did not arise. The Assessing Officer took the view that even though capital was contributed, there is a gift of the goodwill. But this was negatived by the appellate authority as well as the Tribunal. Learned counsel relied on the decision of the Karnataka High Court in CGT v. C. S. Patil [1989] 180 ITR 97 and the decision of the Supreme Court in CGT v. Chhotalal Mohanlal [1987] 166 ITR 124 and also contended that the inadequacy of consideration cannot be now challenged before this court, as that was not raised before the Tribunal. According to us, the argument of counsel for the Revenue cannot be accepted. The decision in CGT v. Chhotalal M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le partners in favour of the incoming partners amounted to gift and charged gift-tax on it. The Appellate Assistant Commissioner affirmed the order of the Income-tax Officer. The Tribunal held that since the six new partners had contributed capital to the firm, the erstwhile partners were not chargeable to gift-tax in respect of the reduction in their share interest on the admission of the new partners, The contention taken before the Tribunal was repelled by the High Court and it was held as follows : "The six partners admitted to the firm had contributed capital to the firm and hence there could be no question of gift even in respect of goodwill because unless a business had goodwill, no person would like to join that business as a partne ..... X X X X Extracts X X X X X X X X Extracts X X X X
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