1978 (8) TMI 124

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....ion of Rs. 59,279 as deemed gift by the assessee when he converted the proprietary concern of Bharat Trading Co., into a partnership concern of himself and his children. 2. The deceased assessee was running a business in Cuddalore under the name of Bharat Trading Co., which was a sole business concern. On 1st April, 1970 he converted such business into a partnership concern by taking his two ad....

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....adequate consideration and there is no gift on the formation of the partnership from the individual business. For that he relied on the decision of Madras High Court since reported namely Additional Commr. Of Gift-tax, Madras vs. A.A. Annamalai Nadar(1). Hence he deleted the addition of Rs. 59,279. As against that order, the Revenue is in appeal. The learned Departmental representative contended b....

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.... be accepted. The radio and electrical business was carried on by the assessee for a long number of years and it carried goodwill. However, the main question for consideration is whether the transfer by the assessee is for consideration and whether there was no gift within the meaning of the s. 2(xii) of the Gift-tax Act. Before referring to the legal position, it is necessary to find out whether ....

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....l. 9 of the deed provides that the father should look after the partnership firm and remuneration for management, he was to be paid a salary of Rs. 300 per month. It is clear from the recitals of the partnership deed that the sons and daughters had contributed capital for the partnership firm and this was adequate consideration for conversion of proprietary business into a partnership business. Gi....