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TMI Blog1982 (4) TMI 115X X X X Extracts X X X X X X X X Extracts X X X X ..... : Assessment year Income assessed 1970-71 73,935 1971-72 88,486 1972-73 82,111 1973-74 97,896 1974-75 1,09,845 Though the above firm was in existence for a number of years, it is apparent from the deed of partnership made on 1-4-1973 that there were differences amongst the partners as a consequence of which the instrument dated 1-4-1973 had to be drawn. In this deed, the constitution of the said firm was as under : Shri Hiranand son of Laxmi Chand 26 per cent Shri Guranditta Ram son of Laxmi Chand 26 per cent Shri Chuni Lal son of Laxmi Chand 24 per cent Shri Om Parkash son of Laxmi Chand 24 per cent The business of the firm, however, continued to be that of purchase and sale of cloth on wholesale basis at Purani Ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly, the ratio for sharing the losses, if any, was as under: Guranditta Ram 43 per cent Chuni Lal 43 per cent Smt. Raj Rani 14 per cent 4. While processing the assessment of the two assessees before us, the GTO held the opinion that "Shri Om Parkash (having 24 per cent share) retired surrendering his right in the firm in favour of others. Similarly, Shri Hiranand (having 26 per cent share) retired surrendering his rights in the firm in favour of others without any consideration, which amounts to a gift by them to the others, namely, Shri Guranditta Ram, Chuni Lal, Smt. Raj Rani and Miss Usha Rani". He, therefore, proceeded on the presumption that there was gift of goodwill of the firm of Laxmi Chand Chuni Lal by the outgoing partners ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t did not do so voluntarily and did not relinquish any right and there was no transfer of any property which could be termed as gift. It was also pointed out to the GTO that the retiring partners had started a business in the same line as of the firm, from which they retired, in the same market. In a nutshell, it was contended that besides the sum of Rs. 2,500 which the assessee had himself shown as gift to Subhash Chand, there was no other gift liable to tax. In the case of Hiranand, in response to the notice issued by the GTO calling for a return, a return declaring gift of Rs. 4,000 was filed. This gift was given by Hiranand to Smt. Santosh Kumari by withdrawing this amount from his personal account with Laxmi Chand Chuni Lal, Karnal. Wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee, therefore, with regard to the gift of goodwill worked out by the GTO was allowed. The decision in the case of Hiranand was followed in the case of Om Parkash. The orders of the AAC in both the cases are dated 21-3-1980. 8. The revenue filed appeals against the orders of the AAC. The assessees have filed the cross-objections. In the case of Hiranand, the cross-objection is belated by 20 days and in the case of Om Parkash, it is late by 16 days. Each assessee was required to show reasonable cause for the delay. However, no such cause has been shown and, therefore, before we proceed to dispose of the appeals of the revenue, we dismiss the cross-objections as time-barred in each case. 9. It was contended by the revenue that the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transfer of an asset in existence nor was it without any consideration. Since both these conditions were not fulfilled, there was no question of any gift-tax being levied upon the outgoing partners and, therefore, the AAC rightly allowed the appeals reversing the orders of the GTO in each of the cases. 10. The learned counsel for the assessee submitted that without concession and for the sake of argument if it were to be considered that there was surrender of the value of goodwill, it was not without consideration because they had left behind liabilities which were to be borne by the continuing partners and as such, the surrender, if any, was not without consideration. 11. We have given careful consideration to rival submissions and we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch up their differences. The GTO has not indicated as to how with this background there still existed goodwill which had value because the firm was an ordinary dealer in cloth. The outgoing partners, namely, Om Parkash and Hira Nand, had shares of 24 per cent and 26 per cent whereas the incoming partners had been given 12 per cent and 8 per cent shares in the profits of the firm and 14 per cent of losses were to be borne by Smt. Raj Rani and Usha Kumari was minor admitted to the benefits of partnership. There is no reason shown by the GTO why the outgoing partners should surrender their shares for the other two partners who were not their close kith and kin. In any case, there is nothing to show that there existed goodwill taking into consi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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