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TMI Blog1998 (3) TMI 86X X X X Extracts X X X X X X X X Extracts X X X X ..... ion ? (3) Whether, on the facts and in the circumstances of the case, the Tribunal is right in law and fact in holding that the consideration for which the asset was transferred cannot be ascertained with any degree of certainty and that the transfer cannot be brought within the purview of section 4(1)(a) of the Gift-tax Act ?" The assessee is a company in which the public are not substantially interested. It is engaged in the business of liquor distribution. With effect from April 1, 1979, the assessee was admitted as a partner into a partnership firm, known as J'kobs at Ernakulam. In accordance with clause 4 of the partnership deed dated April 1, 1979, the assessee's contribution towards capital was fixed at Rs. 5 lakhs and the contri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he personal assets is the right which arises or accrues to the partner during the subsistence of the partnership to get his share of the profits from time to time and, after the dissolution of the partnership or with his retirement from the partnership, to get the value of his share in the net partnership assets as on the date of the dissolution or retirement after deduction of liabilities and prior charges. Me credit entry made in the partner's capital account in the books of the partnershipfirm does not represent the true value of the consideration. It is a notional value only, intended to be taken into account at the time of determining the value of the partner's share in the net partnership assets on the date of dissolution or on his re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the partnership firm by the assessee as contribution towards its capital, there was a transfer in the limited sense as held in Sunil Siddharthbhai's case [1985] 156 ITR 509 (SC), inasmuch as, the individual ownership of the assessee over the asset stood reduced into a shared interest. But to attract section 4(1)(a), the Revenue has to establish further that the consideration for the transfer was inadequate and that the market value of the asset exceeded the consideration for which the asset was transferred to the firm. It is here that the ratio of Sunil Siddharthbhai's case [1985] 156 ITR 509 (SC) becomes more significant. The case of the Revenue is that whereas the market value of the asset as per the Government valuer's report was Rs. 10, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his wealth-tax assessment for the assessment year 1979-80. He entered into a partnership with his mother and contributed the said two sites as his capital at a value of Rs. 1,35,000. Subsequently, the firm was reconstituted by inducting the assessee's father as a partner resulting in a change in the profit-sharing ratio of the partners. The Gift-tax Officer held that the contribution of the sites towards the capital of the firm amounted to transfer and determined the value of the sites as Rs. 6,00,000. As the assessee had contributed the sites to the firm valuing them at Rs. 1,35,000, he treated the difference in value, viz., Rs. 4,65,000 as a gift by the assessee to the firm and made an assessment subjecting the same to gift-tax. The Karn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of consideration for the transfer arising from a transaction where a partner contributes his individual property to the partnership, the decision in Sunil Siddharthbhai's case [1985] 156 ITR 509 (SC), which holds that the consideration for such a transfer is unascertainable until the dissolution of the partnership, becomes relevant and applicable. The principles laid down relating to consideration in the said decision with reference to transfer of an asset by a partner to the firm, as a capital contribution apply with equal force to the case at hand as well, In the absence of any explicit provision providing that the amount recorded in the books of account of the firm, as the value of the capital asset contributed by the partner to the firm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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