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TMI Blog1987 (5) TMI 59X X X X Extracts X X X X X X X X Extracts X X X X ..... firm the amounts to the credit of his capital and current accounts. According to the Gift-tax Officer when the assessee was a partner in the firm he had interest in all the assets of the firm including the goodwill attached to the business of the firm, that the actual value of his share was made up of his interest in all the assets including goodwill and that the interest in the goodwill was not taken into account while evaluating the amount due to him on the relinquishment of his share in the firm on retirement. He was of the opinion that the assessee got as consideration for relinquishment of his share only an amount which was less than its market value, the difference being equivalent to his proportionate interest in the goodwill of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal the grounds taken are that the Commissioner (Appeals) failed to consider rule 10(4) of the Gift-tax Rules read with notification issued thereon in No. S.O. 301 dated 20-7-1977 in quantifying the gift involved in this case and that the managerial remuneration fixed by the Commissioner (Appeals) for evaluating the taxable gift is highly excessive and unreasonable besides opposed to the notification mentioned above. In the cross objection the grounds taken are that the Commissioner (Appeals) should have held that there was no gift of property chargeable to gift-tax, that he should have held that there was no goodwill in the instant case, that he should have held that there was consideration for goodwill, that he should have given deduc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... future profits was not an existing asset at the time of retirement of the partner. There was no gift chargeable to gift-tax. Reliance is placed on the decisions in the case of CGT v. Chalasani Subbayya [1983] 144 ITR 295 (AP) and in the case of Sharadkumar Shrikrishna v. CGT [1986] 160 ITR 332 (MP). The firm did not have any goodwill. It was doing business in ordinary line like hill produces and jewellery. Even assuming that what the G.T.O. brought to tax was share in the goodwill, the cases cited above would show that there is no scope for the assessment. The Commissioner (Appeals) should have held that there was consideration for the share in the goodwill parted because of the undertaking by the incoming partners to bring in capital, to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T.O., when the assessee was a partner of the firm he had interest in all the assets of the firm including the goodwill attached to the business of the firm, that accordingly the actual value of his share was made up of his share in all the assets including goodwill and that the interest in the goodwill was not taken into account while evaluating the amount due to him on the relinquishment of the share in the firm on retirement. What the G.T.O. meant by this is that each partner had a share in each specific asset of the partnership and that the assessee's share in the partnership is equivalent to his share in the aggregate value of all the assets of the partnership. This view of the G.T.O. runs contrary to the decision of the Supreme Court i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deed. The assessee retired during the subsistence of the partnership. According to the aforesaid decision of the Supreme Court the right of the partner during the subsistence of the partnership is only to obtain such profits, if any, that fall to his share from time to time. During the subsistence of the partnership no partner can predicate his share in any specific asset of the partnership, or assign or transfer his interest in any specific asset of the partnership to anyone. Only upon the dissolution of the firm his right to share in the assets of the firm comes in. From the above it will be seen that it cannot be said that the assessee had got a share in the goodwill, considered by the G.T.O. as an asset of the firm. The alleged relinqu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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