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TMI Blog1980 (3) TMI 77X X X X Extracts X X X X X X X X Extracts X X X X ..... ated in the statement of case show that the assessee was a partner in a firm, Kishan Lal Company, his share being 50%. This partnership started in September, 1956, and the business was that of wine merchants. Shri Kishan Lal, the assessee, was assessed on his share in the partnership business right up to 1963-64, but in 1964-65 he did not show this income in his personal return because he claimed that the share in the partnership had been transferred to the HUF consisting of himself, his wife, his minor sons and minor daughters. There was a deed of declaration dated 1st June, 1963, to this effect. After the declaration had been made, an estimate for the purpose of advance tax was also made in the name of the HUF. A gift-tax return was fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had an unlimited liability, hence a public notice was necessary. On appeal to the Income-tax Appellate Tribunal, it was held that what was actually transferred was an asset and not a liability. This was based on an examination of the account of the firm and, moreover, it was held that the share in the partnership business was a lucrative source of income and so it could not be held that it was a liability which was transferred and not an asset. On the said facts, the following question has been referred to us under s. 256(1) of the I.T. Act, 1961 : " Whether, on the facts and in the circumstances of the case, and having regard to the terms of the deed of declaration dated June 1, 1963,(sic) should be assessed in the hands of Kishan Lal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate claim therein : but to establish such abandonment a clear intention to waive separate rights must be established. " The only question that requires our decision is whether a share in a partnership can be so transferred to the HUF. In this respect, it is sufficient to notice the following passage from Addanki Narayanappa v. Bhaskara Krishnappa, AIR 1966 SC 1300, at page 1304, column 2 : " It is true that even during the subsistence of the partnership a partner may assign his share to another. In that case what the assignee would get would be only that which is permitted by s. 29(1), that is to say, the right to receive the share of profits of the assignor and accept the account of profits agreed to by the partners. " Thus, there ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a partner of his interest in the firm, either absolute or by mortgage or by the creation by him of a charge on such interest, does not entitle the transferee, during the continuance of the firm, to interfere in the conduct of the business, or to require accounts, or to inspect the books of the firm, but entitles the transferee only to receive the share of profits of the transferring partner, and the transferee shall accept the account of profits agreed to by the partners. (2) If the firm is dissolved or if the transferring partner ceases to be a partner, the transferee is entitled as against the remaining partners to receive the share of the assets of the firm to which the transferring partner is entitled, and, for the purpose of ascerta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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