1989 (6) TMI 38

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.... partner. The Gift-tax Officer was of the view that by retiring from the firms, the assessee had relinquished his rights in the two firms without any consideration for the goodwill. Accordingly, he computed the value of the right forgone by the assessee in the two firms at Rs. 35,000 and Rs. 1,35,000, respectively. On appeal, the Appellate Assistant Commissioner held that there was no voluntary act by the assessee in relinquishing his right or interest in the firms and that there was no gift exigible to tax. The Tribunal, on further appeal by the Gift-tax Officer, confirmed the order of the Appellate Assistant Commissioner. Thereafter, at the instance of the Commissioner of Gift-tax, Trivandrum, the following question of law was referred....

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.... a fixed share, the right to the money value of the goodwill stands transferred, the transaction does constitute a gift under the Act. Since there has been no dispute about valuation of the goodwill I as made by the Gift-tax Officer, with the conclusion that there has been a gift in respect of a part of the goodwill, the answer to the question referred has to be in the affirmative, that is, that it constitutes a gift under the Act." The question here is entirely different. There was no transfer of the share of goodwill. The assessee only retired from the firm in which he had been a partner. The contention advanced was that on the retirement of the assessee from the firms, a gift had arisen in respect of the value of the share thus relinq....

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....n entered into by any person with intent thereby to diminish directly or indirectly the value of his own property and to increase the value of the property of any other person;" Thus, there must be a transfer by one person to another person and that transfer must be of an existing movable or immovable property made voluntarily without consideration in money or money's worth. In Addanki Narayanappa v. Bhaskara Krishnappa, AIR 1966 SC 1300, the Supreme Court had occasion to consider the nature of a partner's interest in a partnership firm. It was held therein that during the subsistence of the partnership, no partner can deal with any portion of the partnership property as his own. Nor can he assign his interest in a specific item of th....