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TMI Blog1987 (7) TMI 75X X X X Extracts X X X X X X X X Extracts X X X X ..... ate Tribunal was right in its conclusion that the applicant was not entitled to exemption under section 5(1)(xiv) of the Gift-tax Act ? 3. Whether the Appellate Tribunal was right in its conclusion that the relinquishment of profit-sharing ratio inter se partners amounted to a gift attracting gift-tax ? " The respondent herein is the Revenue. The short facts are the following: We are concerned with the assessment year 1974-75. The assessee (applicant) and his three sons were partners in a firm, M/s. Great Oriental Circus. The assessee had 40% share in it till March 31, 1973. On April 11, 1973, a new deed of partnership was entered into by the assessee and his three sons who were the existing partners in the firm. In that partnership, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m did not change in any way by the above adjustment of the profit and shares. The firm was carrying on the business of putting on circus shows. Even after surrender of 15% of his share of profits, the assessee continued to occupy a pivotal role in the conduct of the business. On these premises, the Appellate Tribunal held that this was a case where the assessee voluntarily relinquished 15% of his right to share of profits of the firm to his three sons and to that extent there was a gift. When partnership firm is reconstituted resulting in the reduction of the share of profits of some partners and the consequential increase in the share of profits of others, it would result in a gift exigible to tax under the Gift-tax Act. It has been held s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this case, the assessee, who surrendered, his 15% of the share of profits, as also the three persons, in whose favour the surrender was made, were all majors. There was no question of any minor being involved in the above transaction. So, the Appellate Tribunal was justified in distinguishing the decision of the Gujarat High Court in CGT v. Chhotalal Mohanlal [1974] 97 ITR 393. It should also be stated that the said decision of the Gujarat High Court in Chhotalal Mohanlal's case [1974] 97 ITR 393 was reversed by the Supreme Court in CGT v. Chhotalal Mohanlal [1987] 166 ITR 124. We are of the opinion that the decision of the Appellate Tribunal is justified in law. So we answer question No. 1 in the affirmative, against the assessee and in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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