Partner retirement and partnership rights: no taxable gift arises absent a distinct transfer of property for no consideration.

A partner's retirement from a firm, without a distinct transfer of goodwill or any other existing property, does not amount to a taxable gift under the Gift-tax Act, 1958. The definition of "gift" requires a voluntary transfer of existing movable or immovable property without consideration, and "transfer of property" contemplates an alienation from one person to another. On retirement, there is only a readjustment of rights among the partners in the partnership assets, not a transfer of specific property or future profits. The transaction is therefore a settlement of partnership rights, and no gift arises.

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Issues: Whether a partner's retirement from partnership firms, without a separate transfer of goodwill or other property, gave rise to a taxable gift under the Gift-tax Act, 1958.

Analysis: A gift under section 2(xii) of the Gift-tax Act, 1958 requires a voluntary transfer of existing movable or immovable property without consideration in money or money's worth. The expression "transfer of property" in section 2(xxiv) contemplates an alienation of property from one person to another. On retirement of a partner, there is only a readjustment of rights between the retiring and continuing partners in the partnership assets. The retiring partner does not transfer any specific property or goodwill merely by withdrawing from the firm, and there is no transfer of future profits after cessation of partnership. The substance of the transaction is a settlement of partnership rights, not a gift.

Conclusion: No element of gift was involved in the assessee's retirement from the firms, and the reference was answered in favour of the assessee and against the Revenue.

Final Conclusion: Retirement from a partnership, by itself, does not constitute a taxable gift unless there is a distinct transfer of property within the statutory definition.

Ratio Decidendi: A partner's retirement from a firm, without a voluntary transfer of existing property for no consideration, amounts only to a reallocation of partnership rights and is not a "gift" under the Gift-tax Act, 1958.

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