9911796707
TMI Blog1982 (4) TMI 124X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 1st April, 1973 that there were differences amongst the partners as a consequence of which the instrument dt. 1st April, 1973 had to be drawn. In this deed, the constitution of the said firm was as under: Shri Hira Nand S/o Laxmi Chand 26per cent Shri Guranditta Ram S/o Laxmi Chand 26per cent Shri Chuni Lal S/o Laxmi Chand 24per cent Shri Om Parkash S/o Laxmi Chand 24per cent The business of the firm, however, continued to be that o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cent Miss Usha Rani 8per cent Since Miss Usha Rani was minor and admitted to the benefits of partnership only, the ratio for sharing the losses, if any, was as under: Guranditta Ram 43per cent Chuni Lal 43per cent Smt. Raj Rani 14per cent 4. While processing the assessments of the two assessees before us, the GTO held the opinion that "Shri Om Parkash (having 24per cent share) retired surrendering his right in the firm in favour of others. Similarly, Shri Hira Nand (having 26per 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, Smtt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so pointed out to the GTO that the dissolution of the firm in which the assessee was the partner was on account of differences amongst the partners and the partners who went out 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 nut shell, 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 Hira Nand, in response to the notice issued by the GTO calling for a return, a return declaring g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... partners as they left because of certain difference and were able to show better results in their separate business which was indeed a rival to the existing business. The appeal of the assessee, therefore, with regard to the gift of goodwill worked out by the GTO was allowed. The decision in the case of Hira Nand was followed in the case of Om Paraksh. The orders of the AAC in both the cases are dt. 21st March, 1980. 8. The revenue filed appeals against the orders of the AAC. The assessee have filed the cross objections. In the case of Hira Nand, the cross Objections is belated by 20 days and in the case of Om Prakash, it is late by 16 days and in the case of Om Prakash, it is late by 16 days. Each assessee was required to show reasonab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly because a firm in existence earned substantial profits that per se does not establish existence of goodwill of that firm in the market which would fetch value so as to bring it within the ambit of GT Act. In the case before us, it was contended, there was neither any 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 ACC rightly allowed the appeals reversing the orders of the GTO in each of the cases. 10. The ld. 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 good ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assage of time. From the above guidelines provided by the highest court of this land, we examine the facts of the case before us. From examination of the facts it becomes clear that the outgoing partners had internecine activities resulting into instrument dt. 1st April, 1973 to patch 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 24per cent and 26per cent whereas the incoming partners had been given 12per cent and 8per cent shares in the profits of the firm and 14per cent of losses were to be borne by Smt. Raj Rani and Usha Kumari was minor admit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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