9911796707
TMI Blog1984 (3) TMI 142X X X X Extracts X X X X X X X X Extracts X X X X ..... continued up to 31-3-1977. With effect from 1-4-1977 Shri Rajinder Kumar, M. Com. s/o Shri Ram Lal, 25 years, Shri Harbhagwan, B.A. s/o Shri Amar Lal, 26 years and Smt. Kailash Wati, w/o Shri Jaggan Nath were admitted as new partners. Sharvshri Rajinder Kumar and Harbhagwan were working with the firm for about two years on the date they were admitted as partners. They respectively contributed Rs. 21,060 and Rs. 10,000 as capital. Smt. Kailash Wati contributed Rs. 15,000 as her share of the capital. A clause in the instrument of partnership provided that the capital of the firm/partners shall be as per books. These amounts were in the books of the firm in respect of the new partners when they joined the partnership firm. The profits and loss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purpose of the business which was exempt under section 5(1)(xiv). Hence, the grievance of the revenue. 6. Relying upon the judgment of the Madras High Court in the case of CGT v. V.A.M. Ayya Nadar [1969] 73 ITR 761, it was contended by the revenue that goodwill was an asset which had been gifted and the action of the GTO was supported by this judgment. It was also submitted that if upon the proper scrutiny of the change in the constitution of the firm it appears that the share of a major erstwhile partner is reduced and the amount of share reduction has been given to the new partner, there may result an assignment or alienation of property liable to gift-tax. The AAC, therefore, erred in reversing the order of the GTO and in allowing the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is induction of three new partners and there is no redistribution of the shares of the profits as between one partner and the others who were already partners. Therefore, the revenue cannot seek any support from this judgment. Insofar as the reliance placed upon the judgment of the Bombay High Court in the case of CGT v. Premji Trikamji Jobanputra [1982] 133 ITR 317 is concerned, it also gives no help to the revenue because there the Hon'ble Court observed that if upon the proper scrutiny of a change in the constitution of a firm by admitting a minor to the benefits of a partnership, it appears that the share of a major erstwhile partner is reduced and the amount of share reduction has been given to his minor child, who has been admitted to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r in the relevant partnership deed that there was a goodwill of the firm. In any case, in the books of account no goodwill of the firm was recorded. The deed of reconstitution clearly shows that the new partners came in with capital to contribute to the finances of the firm. Two of them had gained experience in the working and were well educated. The claim of the revenue that there was goodwill and that the goodwill had been gifted in the manner described by the GTO does not find support from anywhere. In any case, it is clear that the admission of the new partners was for continuing the business and was in the business interest. As such, there was no question of any gift-tax involved in such reconstitution. The gift-tax assessment made by ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
