TaxTMI 
TaxTMI 
1995 (3) TMI 51
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....ar in question, there was a change in the constitution of the firm and new partners who introduced share capital were admitted. Consequent on the change in the constitution of the firm, the assessee's share in the property of the firm was reduced from 20 to 10 per cent. The Gift-tax Officer held that the assessee had surrendered a moiety of his share in favour of the incoming partners and this constituted gift. He valued the gift at Rs. 44,650 and completed the assessment. The Appellate Assistant Commissioner, on an appeal filed by the assessee, allowed the appeal and held that there was no gift involved. Further appeal to the Tribunal by the Revenue was dismissed. These facts led to the reference. The Tribunal referred to two decisions of....
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....n the business and work of the firm. The Karnataka High Court held that the contributions in the share capital and participation in the business of the firm constitute adequate consideration and, therefore, there is no taxable gift. In J. N. Marshall's case [1979] 120 ITR 613 (Bom), the firm originally consisted of an assessee and his son-the assessee alone was entitled to goodwill. The firm took three new partners and a new partnership deed was executed giving goodwill to only three of the partners. The new partners admitted were the son and two daughters of the assessee. The Gift-tax Officer took the view that the assessee who had been till then the sole owner of the goodwill gifted his goodwill to his son and two daughters for no consid....
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....R 124. The question in the former case was relating to goodwill of a firm on the death of a partner who retired before her death. At the time of retirement, she was not paid any amount of her interest in the goodwill of the firm. It was held that the goodwill is property, that except when there is a contrary provision in the deed of partnership, a partner at the time of retirement is entitled to get the value of his share in the goodwill just as he is entitled to get the value of his share in the other assets of the firm, and that the value of his share in the goodwill was property passing on his death liable to estate duty. That was clearly a case of an implied gift without consideration and attracting the definition of the expression "gif....