https://www.taxtmi.com/caselaws?id=273171 Reduction of a partner's profit share on reconstitution does not by itself create a taxable gift; the Revenue must show that the transfer was without consideration or for inadequate consideration. Here, the incoming partners contributed capital, undertook the firm's borrowings and creditor liabilities, gave personal guarantees, and actively participated in the business, which also supported expansion. Those elements amounted to real and adequate consideration for the reconstitution. The Tribunal was therefore wrong to treat the share reduction as a gift exigible to tax. en-us Thu, 17 Aug 2017 00:00:00 +0530 Sat, 09 Jun 2018 07:35:46 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=273171 Reduction of a partner's profit share on reconstitution does not by itself create a taxable gift; the Revenue must show that the transfer was without consideration or for inadequate consideration. Here, the incoming partners contributed capital, undertook the firm's borrowings and creditor liabilities, gave personal guarantees, and actively participated in the business, which also supported expansion. Those elements amounted to real and adequate consideration for the reconstitution. The Tribunal was therefore wrong to treat the share reduction as a gift exigible to tax. Case-Laws Income Tax Thu, 17 Aug 2017 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=273171