Deemed gift and partnership reconstitution: supported consideration meant no taxable gift arose on revised profit-sharing ratios.

Admission of new partners and revision of profit-sharing ratios did not create a deemed gift where the Tribunal found, on evidence, that the partners were working partners, one had contributed capital, and the reconstituted arrangement was supported by consideration. On that factual basis, the Tribunal held that no transfer of profit without consideration arose within the meaning of the Gift-tax Act, 1958, and no deemed gift resulted. Because the finding turned on appreciation of evidence and consideration, it was treated as a finding of fact and did not give rise to a referable question of law.

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Issues: Whether the Tribunal was justified in holding that there was no deemed gift under section 4(1)(c) of the Gift-tax Act, 1958 on the admission of the new partners and the revision of profit-sharing ratios, and whether any referable question of law arose from that finding.

Analysis: The Tribunal recorded a factual finding that the newly admitted partners were working partners, one of them had contributed capital, and the change in the partnership arrangement was not without consideration. On that basis, the Tribunal held that there was no transfer of any profit without consideration and that no deemed gift arose within the meaning of section 4(1)(c). A finding that the arrangement was supported by consideration and that no gift resulted was treated as a finding of fact, from which no referable question of law arose.

Conclusion: The Tribunal was justified in holding that no deemed gift arose under section 4(1)(c) of the Gift-tax Act, 1958, and the Revenue's request for reference was rightly rejected.

Final Conclusion: The application for reference was dismissed because the controversy was concluded by a factual finding that the partnership change was supported by consideration and did not give rise to a deemed gift.

Ratio Decidendi: Where the Tribunal finds, on evidence, that a partnership reconstitution and revision of profit shares were supported by consideration, the resulting absence of a deemed gift is a finding of fact and does not raise a referable question of law.

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