1993 (10) TMI 61

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....ts of the case are that the assessee was a partner in the firm, Messrs. Kamal Industries, prior to the assessment year 1976-77. The assessee retired during the assessment year 1976-77 and his son, Shri Suraj Nankani, was taken up as a partner in his place. The Gift-tax Officer considered that it is a deemed gift by the father to his son and the same is taxable in the hands of the assessee. In the appeal before the Appellate Assistant Commissioner of Income-tax, it was held that it was surrender of the interest of the assessee in the firm and, therefore, the said surrender of interest in the share of the firm was a deemed gift. In second appeal before the Income-tax Appellate Tribunal, the appeal was allowed on the ground that there was n....

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....n the retirement of the father, his son was taken as a partner but what were the terms in the deed, it has not been discussed by the taxing authorities including the Tribunal. In accordance with the provisions of section 4(1)(c) of the Act, the surrender of any interest in the property is deemed to be a gift. A partner may not have a right on retirement to share in future profits but at the time of retirement, he has a right in the goodwill of the firm. Whether there is any goodwill or not and whether the surrender of the interest in the goodwill was bona fide or not has to be determined on the basis of the facts available on record. The logic, on the basis of which the Income-tax Appellate Tribunal has proceeded is the future right of a pe....