https://www.taxtmi.com/caselaws?id=61978 Reconstitution of a partnership on admission of new partners who contribute substantial capital does not, by itself, create a taxable gift when an existing partner's profit share is reduced. The partnership rearrangement was treated as a reconstitution rather than a transfer of any specific asset, and goodwill could not be isolated as gifted absent a real transfer without consideration. The contribution of capital by the incoming partners was recognised as adequate consideration. For valuation, interest at 12% on capital was allowable under the relevant Gift-tax valuation rule and notification. en-us Fri, 28 Feb 1986 00:00:00 +0530 Mon, 17 Jan 2011 13:45:40 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=61978 Reconstitution of a partnership on admission of new partners who contribute substantial capital does not, by itself, create a taxable gift when an existing partner's profit share is reduced. The partnership rearrangement was treated as a reconstitution rather than a transfer of any specific asset, and goodwill could not be isolated as gifted absent a real transfer without consideration. The contribution of capital by the incoming partners was recognised as adequate consideration. For valuation, interest at 12% on capital was allowable under the relevant Gift-tax valuation rule and notification. Case-Laws Income Tax Fri, 28 Feb 1986 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=61978