1984 (4) TMI 84

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..... . 2. It would appear that the assessee filed a return of gift-tax declaring 'deemed' gift of Rs. 22,700 as his share in the partnership represented by the reduction of 8 per cent of the profit of the partnership on account of the admission of Master K.U. Motla. Subsequently, however, he filed a letter stating that there was no gift and no gift-tax liability arose. The GTO, however, held that the claim of the assessee could not be accepted. According to him, the realignment or redistribution of the share of profit had the effect of diminishing the partner's interest involving it as a transfer of property. The GTO calculated the value of the gift by taking the average profit of the firm for five years ending with the year of the alleged gif .....

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..... 317 (Bom.) came up for consideration. In our view, it is not necessary to go into all these decisions as the problem on hand could be decided on the mere factual positions. Apparently, what has happened is that a minor was admitted to the benefits of a partnership in which four partners were there, the minor being entitled to a share of 16 per cent of the profit. The minor did not contribute any capital. It is true that as a result of the realignment of the profit-sharing ratio, two of the old partners had their profit reduced whereas the other two partners retained their same profit. While this is a natural result of five persons sharing the profit of the firm as against four, what is relevant for gift-tax purposes is whether the alleged d .....

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..... case of a loss in the partnership where the partners have to bring amounts to pay up the creditors, it may not be the assessee who is called upon to pay them but some other partner. The minor does not bear the loss. The loss is borne by the major partners. In this sense all the partners would be bearing the loss which if the minor had been a major partner would have been borne by him. What we want to emphasise is that the admission of a minor to the partnership is absolutely unrelated to any one of the partners individually and even as regards the entire partnership, it is a matter of such legal complexity that one cannot hold that any one partner has parted with any asset much less without consideration. There is no transfer of any asset t .....

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