1999 (6) TMI 8

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..... itution of a firm, by which reconstitution, the share of the assessee was reduced and the shares allotted to another partner who was newly inducted and to a minor to whom the benefits of the partnership was extended. The Gift-tax Officer regarded that reconstitution effected on April 1, 1971, as resulting in a gift from the assessee to Smt. P. Fareeda Begum, who was the newly admitted partner and .....

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..... the firm of T. Abdul Wahid and Co., from 35 percent to 25 percent would be held to be a relinquishment or surrender of the assessee's interest in the firm and that hence there would be no liability to gift-tax? 3. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in holding that the surrender or relinquishment of the assessee's interest in the firm .....

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..... hare to the partner so admitted, being construed as a gift liable to tax. There is no dispute here about the fact that the new partner was in fact inducted, that the transaction was not sham or nominal, and that capital also was contributed by her. As a partner, she would be liable to share in the future liabilities and losses of the firm, and was bound to exercise due diligence over the conduc .....

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