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TMI Blog2000 (10) TMI 48X X X X Extracts X X X X X X X X Extracts X X X X ..... of this court in Kantilal Trikamlal's case [1976 (7) TMI 61 - SUPREME Court]. As in the case of the Hindu joint family, the coparceners do not have exclusive rights in any specific property of the family, the property allotted to their shares become specified only on partition ; the same is the position in the case of a partner of a firm. No partner of a firm can claim exclusive or specific right in any specific asset of the property of a firm. Coparceners also have definite share in the Hindu undivided family. So also the partners have definite share in the partnership. In favour of assessee. - - - - - Dated:- 17-10-2000 - Judge(s) : S. P. BHARUCHA., S. N. PHUKAN., SHIVARAJ V. PATIL JUDGMENT The judgment of the court was delivered by SHIVARAJ V. PATIL J.---This appeal is by the assessee against the judgment and order dated April 25, 1988 (see [1988] 172 ITR 632), passed by the Division Bench of the High Court of Andhra Pradesh. It relates to the assessment year 1972-73. The Income-tax Appellate Tribunal, Hyderabad (for short "the Tribunal"), had referred the following question under section 26(1) of the Gift-tax Act, 1958 (for short the "Act"), for the opinion of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on November 22, 1971, with effect from that date. The relevant terms contained in the deed of dissolution are given below : "(i) All the assets and liabilities of the partnership including the Ian([ and building are taken by Sri Bishanlal from November 22, 1971. (ii) Sri Jagatram renounced his right, share and interest in the slid assets and liabilities from November 22, 1971. (iii) In full settlement and satisfaction of the share, right and interest of Sri Jagatram in the partnership including land and buildings, profits and goodwill and the amounts standing to the credit of Sri Jagatram in the partnership accounts as on November 21, 1971, Sri Jagatram has agreed to receive Rs. 3,00,000. (iv) Out of the said Rs. 3,00,000, Rs. 1,00,000 has already been paid. The balance of Rs. 2,00,000 is payable by Sri Bishanlal against the sale consideration of the undivided 50 per cent. share in the land and building known as 'Mohsin-ul-Mulk Kothi". (v) Sri Jagatram should immediately execute a sale deed and register the same in favour of Sri Bishanlal conveying his 50 per cent. share in the land and building for Rs. 2,00,000." It was on March 10, 1972, that the appellant and Bis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e decisions relied on by the High Court in support of its conclusion were not directly on the point and some of them arose under the Estate Duty Act. Per contra, learned senior counsel for the respondent argued supporting the view taken by the High Court. We have carefully considered the submissions made by learned counsel for the parties. In order to appreciate the respective contentions of the parties and to resolve the controversy we consider it appropriate to extract the definitions of "gift" and "transfer of property" from section 2 of the Act : "2. (xii) 'gift' means the transfer by one person to another of any existing movable or immovable property made voluntarily and without consideration in money or money's worth, and includes the transfer or conversion of any property referred to in section 4, deemed to be a gift under that section : Explanation.---A transfer of any building or part thereof referred to in clause (iii), clause (iiia) or clause (iiib) of section 27 of the Income-tax Act, by the person who is deemed under the said clause to be the owner thereof made voluntarily and without consideration in money or money's worth, shall be deemed to be a gift made b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 2(xxiv)(d) did not apply. (iv) That, therefore, there was no gift by the assessee on which he was liable to pay gift-tax, on the reason that a member of the Hindu undivided family has no definite share in the family property before the division and he cannot be said to diminish directly or indirectly the value of his property or to increase the value of the property of any other coparcener by agreeing to take a share lesser than what he would have got if he would have gone to a court to enforce his claim. The word "transaction" in clause (d) of section 2(xxiv) takes its colour from the main clause ; it must be a transfer of property in some way. The words "disposition, conveyance, assignment, settlement, delivery and payment" are all used to indicate some kind of transfer of property. An interpretation clause which extends the meaning of a word does not take away its ordinary and popular meaning. It is a settled position in law that a partition of the Hindu undivided family cannot be considered as a transfer in the strict sense. In CIT v. Keshavlal Lallubhai Patel [1965] 55 ITR 637 this court stated thus : "But, is a partition of the joint Hindu family property a transfe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion and 'payment' implies gift of money by someone to another. We do not think that a partition in a Hindu undivided family can be considered either as 'disposition' or 'conveyance' or 'assignment' or 'settlement' or 'delivery' or 'payment' or 'alienation' within the meaning of those words in section 2(xxiv). This leaves us with clause (d) of section 2(xxiv) which speaks of a transaction entered into by any person with intent thereby to diminish directly or indirectly the value of his own property and to increase the value of the property of another person. A member of a Hindu undivided family who, as mentioned earlier, has no definite share in the family property before division, cannot be said to diminish directly or indirectly the value of his property or to increase the value of the property of any other coparcener by agreeing to take a share lesser than what he would have got if he had gone to court to enforce his claim. Till partition his share in the family property is indeterminate. He becomes entitled to a share I in the family property only after the partition. Therefore, there is no question of his either diminishing directly or indirectly the value of his own property ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and other cases it expressed the view that a partnership firm under the Indian Partnership Act is not a distinct legal entity apart from the partners constituting it and that in law the firm as such has no separate rights of its own. When one talks of the property or assets of the firm all that is meant is property or assets in which all partners have a joint or common interest. Hence, the contention that upon dissolution of the firm rights in the partnership assets are extinguished, cannot be accepted. It is further, held that the partners own jointly or in common the assets of the partnership and, therefore, the consequence of the distribution, division or allotment of assets to the partners which flows upon dissolution after discharge of liabilities is nothing but a mutual adjustment of rights between the partners and there is no question of any extinguishment of the firm's rights in the partnership assets amounting to a transfer of assets within the meaning of section 2(47) of the Income-tax Act, 1961. Although the case arose under the provisions of the Income-tax Act, but as to the nature and character of transaction of mutual adjustment of rights between the partners upon di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tners whose shares inter se are specific and determined at any given point of time and that the said decision had to be read and understood in the light of the subsequent decision of this court in Kantilal Trikamlal's case [1976] 105 ITR 92. As in the case of the Hindu joint family, the coparceners do not have exclusive rights in any specific property of the family, the property allotted to their shares become specified only on partition ; the same is the position in the case of a partner of a firm. No partner of a firm can claim exclusive or specific right in any specific asset of the property of a firm. Coparceners also have definite share in the Hindu undivided family. So also the partners have definite share in the partnership. In our considered view, the principles stated in Getti Chettiar's case [1971] 82 ITR 599 (SC) equally apply to a case of allotment or adjustment of properties among the partners upon dissolution of a firm. We fail to understand how Kantilal Trikamlal's case [1976] 105 ITR 92 (SC) made any difference. The said case did not show any disagreement with the principles stated in Getti Chettiar's case [1971] 82 ITR 599 (SC) and no distinction was made to take a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to a transfer. The controlling distinction consists in the difference in definition between the Gift-tax Act (section 2(xxiv)), and the Estate Duty Act (section 2(15))." We find that Kantilal Trikamlal's case [1976] 105 ITR 92 (SC) supports the view taken in Getti Chettiar's case [1971] 82 ITR 599 (SC). Added to this, section 2(15) of the Estate Duty Act, defining "property" came up for consideration in Kantilal Trikamlal's case [1976] 105 ITR 92 (SC). We may state here itself that the words and expressions defined in one statute as judicially interpreted do not afford a guide to the construction of the same words or expressions in another statute unless both the statutes are pari materia legislations or it is specifically so provided in one statute to give the same meaning to the words as defined in other statute. The aim and object of the two legislations, namely, the Gift-tax Act and the Estate Duty Act are not similar. In CIT v. Bankey Lal Vaidya [1971] 79 ITR 594 (SC), it is clearly stated that where in the course of dissolution, the assets of the firm are divided between the partners according to the respective shares, by allotting the individual assets or paying the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its and this case was referred to and approved by this court in Chhotalal Mohanlal's case [1987] 166 ITR 124. The case of Premji Trikamji [1982] 133 ITR 317 (Bom) is again a case where in the constitution of a firm, minors were admitted to the benefits of the partnership firm. In all these cases, minors were admitted to the benefits of the partnership and if such partner or minor did not bring in capital of his own into the partnership firm corresponding to his share, it was held that the transaction amounted to a gift. But the present case stands entirely on a different footing. It is clearly and merely a case of adjustment or distribution of assets of the firm in regard to share of the appellant on its dissolution and as such no transfer of property was involved in it. Thus, in our view, the High Court was not right in applying the decisions in (1) Chhotalal Mohanlal's case [1987] 166 ITR 124 (SC) (2) M. K. Kuppuraj's case [1985] 153 ITR 481 (Mad) and (3) Premji Trikamji's case [1982] 133 ITR 317 (Bom) to the facts of the case in hand. The cases of this court in (1) Getti Chettiar [1971] 82 ITR 599 ; (2) Malabar Fisheries Co. [1979] 120 ITR 49 ; (3) Dewas Cine Corporation [1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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