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TMI Blog1981 (8) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... ch she was entitled as a retiring partner. The GTO held that the assessee's relinquishment of her share on retirement from the firm amounted to a gift. He levied gift-tax on it, determining the value of the relinquished share at Rs. 77,896. By stages, the matter came before the Appellate Tribunal. The Tribunal confirmed the officer's view that the assessee's relinquishment of her 20 per cent. share amounted to a gift, but they proceeded to hold that it was eligible for exemption under s. 5(1)(xiv) of the G.T. Act. Section 5(1)(xiv) enacts that gift-tax shall not be charged in respect of a gift made by any person " in the course of carrying on a business, profession or vocation, to the extent to which the gift is proved to the satisfaction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... point of view of the businessmen, however, who disburse them, the presents are made only with a view to a substantial return from the business. The return may not be apparent, it may not even be measurable in terms of money in the immediate present, but it will have long-term advantages in the enlargement of markets, the enhancement of goodwill and the like. Otherwise, businessman will not be making these gifts at all. Apparently, in view of these larger economic considerations, Parliament has exempted these gifts from gift-tax, taking care, however, to stipulate that the gifts should be made " in the course of " the business and for the bona fide purposes " of the business. The inquiry in every case, therefore, is whether a gift is or i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cases cited before us, at the time of the hearing, were cases of this kind: GGT v. Dr. George Kuruvilla [1970] 77 ITR 746 (SC), CGT v. Gheevarghese, Travancore Timbers and Products [1972] 83 ITR 403 (SC) and CGT v. Rukmani Ammal [1973] 87 ITR 549 (Mad). What we have, on hand, in the present reference, however, is a different, or almost an opposite, kind of case. Instead of converting a proprietary business into a partnership concern by granting partnership rights gratis, to another person, the assessee leaves an existing partnership concern without demanding from her co-partners whatever is due to her share as a retiring partner. There is, no doubt, an element of gift present, but the question is whether the gift qualifies for exemption ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gift being made in the course of business, it was actually made while the assessee had stopped carrying on business by leaving the partnership. Learned counsel proceeded to submit that even the purpose of the relinquishment by the assessee was not a business purpose, for, it was clear from the record that the assessee was only interested in leaving the business for her own personal reasons. We accept the submissions of Mr. Jayaraman as well founded. The assessee had no individual business of her own, but was only a partner in Mydeen Agencies. Even so, as a partner she might be regarded as carrying on that business. But the question is, was the relinquishment by her of her 20 per cent. share in Mydeen Agencies a relinquishment " in the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under s. 5(1)(xiv). The assessee's desire to devote her entire time to her domestic duties and to improve the prospects of her children only represent personal or domestic objectives, and not business motivations. Mr. Subramaniam, learned counsel for the assessee, pointed out that after the assessee's retirement from the firm, her minor children were admitted to the benefits of the partnership. From this fact, according to learned counsel, must be inferred a business purpose connected with the very partnership in which the assessee was a partner. We do not think this is a correct way of looking at the facts. What the section requires for grant of the exemption is that the gift must subserve the purpose of the assessee's business, and not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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