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TMI Blog1987 (9) TMI 30X X X X Extracts X X X X X X X X Extracts X X X X ..... d of the development rebate reserve is for consideration and that there was no gift within the meaning of section 2(xii) read with section 4(1)(c) of the Gift-tax Act ? " The necessary facts which emerge from a perusal of the record are that the predecessor-in-interest of the present non-applicants, namely, Banarsidas Bhanot, who shall hereinafter be referred to as the assessee, was partner in the firm, M/s. Banarsidas Bhanot and Sons, Jabalpur, having 60% share. The remaining 40% share was held by Dharam Pal Sharma. It further appears that there was another partnership firm in the name of M/s. Pandit Brothers in which three major sons of the assessee were partners. Subsequently, a new partnership in the same name of M/s. Banarsidas' Bha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment in the newly constituted firm and that too formed a consideration for the surrender of his 40% share. The plea raised by the assessee, however, did not find favour with the Gift-tax Officer and the Commissioner of Gift-tax (Appeals), with the result that the surrender of his 40% share by the assessee was taken to be a gift for the purposes of the Act. On a second appeal being filed by the assessee, the Income-tax Appellate Tribunal reversed the orders of the authorities below and held that the surrender of 40% share by the assessee was for consideration. At the instance of the Commissioner of Gift-tax, however, the Tribunal referred the aforesaid question to this court for its opinion. It has been urged by learned counsel for the De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1967-68. On the other hand, the amount sought to be treated as the capital investment of the sons of the assessee was paid only on July 1, 1969. According to him, in this view of the matter, even the payment of the amount of Rs. 3,70,000 odd could not be taken as consideration for the surrender of his 40% share by the assessee. Having heard learned counsel for the parties, we find it difficult to agree with the submission made by learned counsel for the Department. It is true that in so far as the benefit of expertise of the sons of the assessee is concerned, his two minor sons were not in a position to give any benefit of their expertise to the newly constituted firm. However, the three major sons were no doubt in a position to do so. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficult to abruptly close down his business as he has to clear his unfinished work and has to receive back the securities deposited with the Government and it is not denied by the Revenue that they did not take up any new contract during these three years. According to the Tribunal, that being the position, the authorities below could not be said to be justified in holding that the surrender of 40% share in favour of the incoming partners was without consideration. It is apparent that the contribution which was made by the sons of the assessee as capital investment was made not only by his three major sons but also by his two minor sons. That being so, the surrender of 40% share by the assessee in favour of his five sons was, as held by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation is intended to pass but no time-limit is prescribed for payment of consideration inasmuch as in the instant case, even the order of the Gift-tax Officer is dated January 25, 1978, i.e., long after July 1, 1969, which was the date when the consideration had passed. Learned counsel for the Department further urged that the question which has been referred to us is with reference to section (1)(c) of the Act and not with reference to section 4(1)(b) of the Act. In so far as this submission is concerned, it may be pointed out that section 4(1)(c), inter alia, contemplates release, discharge, surrender, forfeiture or abandonment of any interest in property, which in the opinion of the Gift-tax Officer is not bona fide. The word " proper ..... X X X X Extracts X X X X X X X X Extracts X X X X
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