Retiring partner's share in partnership assets, including goodwill, is not a taxable transfer for gift-tax purposes.

A retiring partner's receipt of his share in partnership assets, including goodwill, does not by itself amount to a transfer of property attracting gift-tax, because the payment is treated as what he is entitled to under the partnership arrangement. The Tribunal's finding that the firm had no goodwill was treated as a factual determination, and it was not shown that relevant material was ignored or irrelevant material relied on. On that basis, the view that no taxable gift arose and that the goodwill finding required no interference was upheld in favour of the assessee.

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Issues: (i) Whether the retiring partner's receipt of amounts representing his share in the partnership assets, including goodwill, amounted to a transfer of property chargeable to gift-tax. (ii) Whether the Tribunal's finding that the firm had no goodwill was vitiated for non-consideration of relevant material.

Issue (i): The amount received by a retiring partner towards his share in the partnership assets is what he is entitled to under the partnership arrangement. On the authority affirming that no transfer is involved when a retiring partner takes his share, the retirement and receipt of amounts due did not amount to a transfer of property attracting gift-tax.

Conclusion: The issue was answered in the negative and in favour of the assessee.

Issue (ii): The existence or absence of goodwill on the facts was treated as a factual determination. The Tribunal's finding was not shown to rest on omission of relevant material or reliance on irrelevant material, and no legal infirmity was demonstrated in that factual conclusion.

Conclusion: The issue was answered against the Revenue and in favour of the assessee.

Final Conclusion: The reference was decided in favour of the assessee, with the Tribunal's view upheld that the retirement did not give rise to a taxable gift and that the finding on goodwill did not warrant interference.

Ratio Decidendi: A retiring partner's receipt of his share in partnership assets, including goodwill, does not by itself constitute a transfer of property for gift-tax purposes, and a factual finding on the existence of goodwill will not be disturbed absent legal infirmity.

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