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TMI Blog1989 (6) TMI 38X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee had relinquished his rights in the two firms without any consideration for the goodwill. Accordingly, he computed the value of the right forgone by the assessee in the two firms at Rs. 35,000 and Rs. 1,35,000, respectively. On appeal, the Appellate Assistant Commissioner held that there was no voluntary act by the assessee in relinquishing his right or interest in the firms and that there was no gift exigible to tax. The Tribunal, on further appeal by the Gift-tax Officer, confirmed the order of the Appellate Assistant Commissioner. Thereafter, at the instance of the Commissioner of Gift-tax, Trivandrum, the following question of law was referred under section 26(1) of the Gift-tax Act, 1958, to this court for decision : "Whet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsaction does constitute a gift under the Act. Since there has been no dispute about valuation of the goodwill I as made by the Gift-tax Officer, with the conclusion that there has been a gift in respect of a part of the goodwill, the answer to the question referred has to be in the affirmative, that is, that it constitutes a gift under the Act." The question here is entirely different. There was no transfer of the share of goodwill. The assessee only retired from the firm in which he had been a partner. The contention advanced was that on the retirement of the assessee from the firms, a gift had arisen in respect of the value of the share thus relinquished. It has been held in the decision in Addl. CIT v. Mohanbhai Pamabhai [1987] 165 IT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his own property and to increase the value of the property of any other person;" Thus, there must be a transfer by one person to another person and that transfer must be of an existing movable or immovable property made voluntarily without consideration in money or money's worth. In Addanki Narayanappa v. Bhaskara Krishnappa, AIR 1966 SC 1300, the Supreme Court had occasion to consider the nature of a partner's interest in a partnership firm. It was held therein that during the subsistence of the partnership, no partner can deal with any portion of the partnership property as his own. Nor can he assign his interest in a specific item of the partnership property to any one. His right is to obtain such profits, if any, as fall to his sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng partner in the assets of the partnership and there is no element of transfer. The partnership deed in question has not been made part of the record. The orders of the Gift-tax Officer, the order in appeal of the Assistant Commissioner and of the Tribunal do not disclose any factum of reconstitution. The only question posed is whether there is an element of gift involved when the assessee retired from the firm. After retirement, readjustment will have to be made by the remaining partners. In the light of the above, we hold that the Tribunal was right in concluding that no element of gift was involved when the assessee retired from the firms in which he had been a partner. Therefore, our answer to the question is in the affirmative, i.e. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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