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TMI Blog1976 (4) TMI 43X X X X Extracts X X X X X X X X Extracts X X X X ..... share in the profit of the business and there were two minors, namely, (1) Dipakkumar and (2) Kiritkumar, who were admitted to the benefits of the partnership and had respectively 13% and 12% shares in the profits thereof. It appears that the assessee retired on 23rd September, 1968, and with the consent of the other partners the assessee's minor son, Ashishkumar, was admitted to the benefits of the partnership and he was given 25% share in the profits of the business. When this Ashishkumar was admitted to the benefits of the partnership, the firm was reconstituted with changes in the respective shares of the partners under a new deed of partnership of 23rd September, 1968. According to the reconstituted partnership, Chhotalal Mohanlal redu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... favour of his minor son, Ashishkumar, in the interest of commercial expediency. He, therefore, carved out the assessee's 25% share and after giving the statutory exemption, levied a gift-tax on Rs. 39,282 by his order dated January 14, 1971. The assessee carried the matter in appeal to the Appellate Assistant Commissioner of Gift-tax who following the decision of the Income-tax Appellate Tribunal in the case of Chhotalal Mohanlal Doshi in G.T.A. No. 15 (Ahd.) of 1968-69 (which has been confirmed by now by this court in Commissioner of Gift-tax v. Chhotalal Mohanlal [1974] 91 ITR 393 (Guj) on other grounds) held that if minors were given right to share profits only, then there should be no question of subjecting any future rights to profi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this reference. The original firm was constituted by a partnership deed of November 12, 1968. There were two other partners, namely, Gunvantlal and Pravinbhai besides Chhotalal. Gunvantlal and Pravinbhai had four annas and five annas shares respectively and Chhotalal had seven annas share in the profit and loss of the business. The said firm continued till the assessment year 1962-63. In the beginning of S. Y. 2018 which was relevant to the assessment year 1963-64 there was a change in the constitution of the firm. A new partnership deed was executed on November 9, 1961, between Chhotalal, Gunvantlal and Ramniklal, the present assessee in this reference before us. According to the said reconstitution Chhotalal's share was fixed at 25% inst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the partnership whereby a portion of the share of Chhotalal was sought to be given to them by admitting them to the benefits of the partnership business. In the opinion of the Tribunal, the right to share future profits was not to be considered existing property and, therefore, it reached the conclusion that there was no gift of any property and allowed the appeal. On a reference at the instance of the revenue, the Division Bench of this court while rejecting the contention urged on behalf of the revenue observed [1974] 97 ITR 393, 397 (Guj) : " It was, therefore, urged that if by the reconstitution of the firm, the respondent-assessee has reduced his share by accepting 25% instead of 44% (which is equivalent to seven annas in a rupee) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore, cannot up hold the contention of Mr. Kaji that to the extent to which as a result of the reconstitution the share of the respondent-assessee was reduced, to that extent there was a relinquishment or abandonment of any interest in the property. The partnership has been defined under section 4 of the Partnership Act as the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all and the partners who have entered into partnership with one another are called individually 'partners' and collectively 'a firm'. It should be noted that the minors when they were admitted to the benefits of a partnership did not become by themselves the partners of the firm. They are admitted to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be said to be sufficient to justify the inference or the conclusion that there was gift by Ramniklal in favour of his minor son, Ashishkumar, of the partner's share in the profits of the partnership business. In the facts of the case before us, as it was in the earlier case of Chhotalal Mohanlal [1974] 97 ITR 393 (Guj), there is merely a reconstitution of the firm inasmuch as Chhotalal reduced his share from 25% to 15% and the minor, Dipakkumar, who was admitted to the benefits of the partnership to the extent of 13% in the profits of the business was reduced to 10%. Ramniklal retired and his minor son, Ashishkumar, was admitted to the benefits of the partnership though no doubt the share of the minor was 25% in the profits of the business ..... X X X X Extracts X X X X X X X X Extracts X X X X
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