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TMI Blog1996 (6) TMI 44X X X X Extracts X X X X X X X X Extracts X X X X ..... re in the profits and assets of the firm. She retired on September 30, 1976. The Gift-tax Officer understood this as a gift involved in the process of surrender on retirement. He valued it at Rs. 60,610, on the basis of calculation adopting the super profits method. This was by the order dated August 18, 1982. The Gift-tax Officer in his order dated August 18, 1982, stated that there was no (sic) gift involved in the retirement of the assessee from the firm and it was only a family arrangement. It was held that these are irrelevant considerations, since what was required to be decided was whether there was gift on the retirement of the partner without receiving any consideration in lieu of her forgoing the right to a share of 15 per cent. of the profits of the firm. The officer has observed that this is well-settled, that gift is involved in such circumstances. The first appellate authority decided to view the matter in the proper perspective and in the backdrop of a totality of realignments. The appellate authority considered the situation that there was a large scale realignment of partners in the group of concerns. The assessee was originally a partner in Radhas, Radhas Soap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... profits, there was no gift involved when a partner retired from a partnership. The Tribunal observed that the said decision has been followed and is being followed in the context of the factual matrix and findings recorded hereinbefore. It would be seen as stated at the outset, that the Department in fact wanted to place reliance on the decision of this court in CGT v. Ganapathy Moothan [1972] 84 ITR 758, relating to the situation as to whether the goodwill of business, gifted to the sons by the assessee who was the sole proprietor of a business converting it into a partnership with sons, would amount to a gift. Since this decision was referred to in the questions framed in the original application for reference the decision was brought to our notice in regard to the proposition referred to hereinbefore. On the other hand, learned counsel for the assessee placed reliance on the decision of this court in CGT v. T. M. Luiz Kanamally [1989] 180 ITR 257, in support of his formidable submission that when a partner retires from a partnership there can only be re-adjustment of the rights between the retiring partner and the continuing partners in the assets of the partnership and in tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovision ad verbatim and we do so accordingly : " 2. (xxiv) ' transfer of property ' means any disposition, conveyance, assignment, settlement, delivery, payment or other alienation of property and, without limiting the generality of the foregoing, includes--- (a) the creation of a trust in property ; (b) the grant or creation of any lease, mortgage, charge, easement, licence, power, partnership or interest in property ; (c) the exercise of a power of appointment, whether general, special or subject to any restrictions as to the persons in whose favour the appointment may be made of property vested in any person, not the owner of the property, to determine its disposition in favour of any person other than the donee of the power ; and (d) any transaction entered into by any person with intent thereby to diminish directly or indirectly the value of his own property and to increase the value of the property of any other person. " In other words, the factual matrix if it is to amount to a gift has to convey firstly that it is a transfer as defined in the above reproduced quotation. Secondly, the absence of consideration also has to be floating on the surface of the record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gment it would have to be stated that although the court by reference to section 2(xxiv) considered various aspects of the situations of transfer, concluding that there was no consideration in regard thereto would really be unnecessary in view of the clear factual findings recorded hereinbefore. However, as stated at the outset, the definition of the term " gift " postulates two situations, namely, that it has to be a transfer by one person to another with regard to existing property and, secondly, there has to be absence of consideration money or money's worth. On the accepted and proved facts, firstly, this requirement of absence of consideration in money or money's worth does not get any kind of satisfaction. Secondly, the fact finding authorities have concurrently held that there was consideration in the context of retirement in the nature of family arrangement and realignment of the family business. There is yet a third aspect of the matter and that is as to whether the situation of retirement could be considered as transfer as is statutorily required in the definition of the term " gift " to be found in section 2(xii) of the Gift-tax Act, 1958. It is in this connection th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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