TaxTMI 
TaxTMI 
1982 (8) TMI 125
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....ee retired from the said firm in the year of account. Previously Shri Hastimal, Shri Dhannalal and Shri Vimalkumar were partners and each partners were having 1/3rd share. There was a change in the constitution of the firm by which Shri Vimalkumar, the assessee, retired. As a result of reconstitution of the firm the following partners constituted the firm: Shri Hastimal 30 per cent Shri Dhannalal 30 per cent Shri Rajesh (Minor) 30 per cent Deepa (Minor) 10 per cent The minors were admitted for the benefit of the partnership. In the....
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....g partners admitted the minor to benefits of the partnership firm. There should not be any presumption of any agreement with Shri Vimalkumar. The partnership deed does not say so any where. It was further contended that as far as minor children were concerned, there was no transfer of any asset including alleged goodwill and as such there would be no deemed gift in favour of the minor children by the assessee. Reliance was placed on the ratio of decision in the case of CGT v. Ali Hussian M. Jeevaji (1980) 123 ITR 420 (Mad.), Ramniklal Chhottalal v. CGT (Guj) (1977) 106 ITR 799 (Guj), CGT v. P. Gheevarghese Travancore Timbers and Products (1972) 83 ITR 403 (SC), CGT v. Karnaji Lumbaji (1969) 74 ITR 343 (Guj). 5. The learned Deptl. Rep. su....
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.... deed was executed on 30th November, 1971. Copy of the partnership deed is in the paper book. The new partnership deed was not signed by the retiring partners. In the said partnership deed it was clearly provided that Shri Vimalkumar had retired from 30th November, 1971 and the retiring partners agreed to take over all the assets and liabilities of the firm as on 31st November, 1971. The partnership deed further provides that Shri Dhannalalji Thakuria and Shri Hastimalji Thakuria remaining partners, are willing to admit Master Rajesh, aged 8 years, the son of Shri Vimalkumar and Miss Deepa, aged 11 years, daughter of Shri Vimalkumar, being minors to the benefit of the partnership with effect from 1st December, 1971. The partnership deed doe....
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....e of carrying on the business of the assessee and was to take his purpose of the business. The real intention of the assessee was to take his daughters into the firm with the object of conferring benefit on them for their advancement. The requirements of section 5(1)(xiv) of the Act were not satisfied so far as the gift of Rs. 50,000 was concerned. In the case of CGT v. A.A. Annamalai Nadar (1978) 113 ITR 574 (Mad.) two minors were taken into the firm. They did not render any service to the firm. The minors had only contributed the capital. The contribution of capital was taken into the consideration for the admission of the minors into the benefits of the partnership and it was therefore held that the transaction did not result in a gif....
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....3 ITR 317 (Bom.). In the decision the Hon'ble High Court, held that it is not possible to lay down a general rule in a case like this which will be applicable to all cases where there is a change in the constitution of the firm, as a result of which, a major partner has been introduced and some minors have been admitted to the benefits of the partnership. Whether in the case of such a transaction there would be a gift or not will depend upon the facts of each case. While deciding such cases, the decision will depend upon determination of the following facts: (1) Whether, the value of the assets and goodwill of the earlier business was in excess of the total liabilities of the earlier business. (2) Whether, on behalf of the minors, when they....
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.... out that there was any surrender of the goodwill by Shri Vimalkumar in favour of his minor children. 8. Looking to the aforesaid facts, it is not proved that there was any transfer of the goodwill in favour of minor children by Shri Vimalkumar. The whole case of the department fails on the ground because when the accounts were settled Shri Vimalkumar was having no credit balance in his favour. On the other hand, there were debit balance against him. Under these circumstances, it cannot be said that Shri Vimalkumar could make any alleged gift u/s 4(1)(c) of the Act. 9. The decision in the case of State v. Prem Nath (1977) 106 ITR 466 (All.) (FB) relied by the revenue is not applicable on the facts of the present case. In that case Smt....