1987 (7) TMI 75

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....Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in its conclusion that the applicant was not entitled to exemption under section 5(1)(xiv) of the Gift-tax Act ? 3. Whether the Appellate Tribunal was right in its conclusion that the relinquishment of profit-sharing ratio inter se partners amounted to a gift attracting gift-tax ? " The respondent herein is the Revenue. The short facts are the following: We are concerned with the assessment year 1974-75. The assessee (applicant) and his three sons were partners in a firm, M/s. Great Oriental Circus. The assessee had 40% share in it till March 31, 1973. On April 11, 1973, a new deed of partnership was entered into by the assessee and his three ....

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....ith control over all major matters. The conduct of the business of the firm did not change in any way by the above adjustment of the profit and shares. The firm was carrying on the business of putting on circus shows. Even after surrender of 15% of his share of profits, the assessee continued to occupy a pivotal role in the conduct of the business. On these premises, the Appellate Tribunal held that this was a case where the assessee voluntarily relinquished 15% of his right to share of profits of the firm to his three sons and to that extent there was a gift. When partnership firm is reconstituted resulting in the reduction of the share of profits of some partners and the consequential increase in the share of profits of others, it would r....