Reconstitution of partnership and admission of a minor to benefits did not amount to a taxable gift by the retiring partner.

Reconstitution of a partnership firm and the admission of a minor to the benefits of partnership, with the consent of the continuing partners, did not amount to a unilateral transfer by the retiring partner. The text states that a reduced share in the firm and corresponding admission of the minor son were part of an adjustment of partnership interests, not a relinquishment or abandonment of property capable of being treated as a gift under the Gift-tax Act. On that reasoning, the admission of the minor son to the benefits of partnership was not a taxable gift by the assessee.

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Issues: Whether the reconstitution of the partnership firm and the admission of the assessee's minor son to the benefits of the partnership amounted to a taxable gift by the assessee under the Gift-tax Act.

Analysis: The admission of a minor to the benefits of partnership depends on the consent of the continuing partners and cannot be treated as a unilateral transfer by the retiring partner. On the facts, the arrangement was a reconstitution of the firm, with adjustment of shares among the partners, rather than a relinquishment or abandonment by the assessee of property or an interest capable of being brought within the definition of gift. The mere reduction of the assessee's share and the corresponding admission of the minor son to the benefits of the partnership did not constitute a transfer of property by the assessee.

Conclusion: The admission of the minor son to the benefits of the partnership did not amount to a gift by the assessee, and the reference was answered in favour of the assessee.

Ratio Decidendi: A mere reconstitution of a partnership firm, with admission of a minor to the benefits of partnership by the consent of the continuing partners, does not by itself amount to a gift or transfer of property by the retiring partner for the purposes of gift-tax.

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