Gift-tax exemption for retiring partner's relinquishment fails where the transfer is personal, not tied to the donor's business purpose.

A relinquishment by a retiring partner of her partnership share without monetary consideration is not exempt from gift-tax under section 5(1)(xiv) of the Gift-tax Act, 1958 unless the transfer is made in the course of carrying on the donor's own business and for that business's purpose. Although a partner may be treated as carrying on the firm's business, that condition fails where retirement ends the donor's participation and the relinquishment is linked to personal or domestic reasons. Subsequent benefit to the donor's children or an increase in turnover does not establish the donor's business purpose, so the exemption is unavailable.

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Issues: Whether the relinquishment by a retiring partner of her share in the partnership, without receiving money or specie, was exempt from gift-tax under section 5(1)(xiv) of the Gift-tax Act, 1958.

Analysis: The exemption applies only to a gift made in the course of carrying on the donor's business and for the purpose of such business. A partner may be regarded as carrying on the firm's business, but the requirement is not satisfied where the assessee retires from the partnership and the relinquishment arises because she has ceased to carry on the business. The subsequent admission of the assessee's minor children to the benefits of the firm and the increase in turnover did not establish that the gift subserved the assessee's own business purpose. The reasons for retirement were personal and domestic, not business-related.

Conclusion: The relinquishment was not made in the course of carrying on the assessee's business and was not for the purpose of that business; the exemption under section 5(1)(xiv) was not available.

Ratio Decidendi: A gift qualifies for exemption under section 5(1)(xiv) of the Gift-tax Act, 1958 only if it is made while the donor is carrying on the business and it is motivated by the donor's own business purpose; a retirement-linked relinquishment for personal reasons does not satisfy either condition.

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