1976 (9) TMI 13

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....no gift within the meaning of section 2(xii) of the Gift-tax Act ? 2. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that if at all there was a gift, gift-tax should be levied only on 50 per cent. of the value of the goodwill ?" The relevant facts are as follows : The assessee was carrying on commission business in sanna leaves and pods. He had three sons, one of whom was a major working with him in the business for some remunera- tion. The two other sons are minors. He converted the proprietary business into a partnership business by taking his major son as a partner and by admitting the minor sons to the benefits of partnership. Each of them was entitled to a 25 per cent. shar....

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....ift and the business enjoyed a goodwill, the liability to gift-tax would only be to the extent of 50% of the value of the goodwill of the firm. The Tribunal held that the transfer by the assessee of 75 per cent. share of the value of the goodwill of the firm was for consideration and that, therefore, there was no gift by the assessee to his sons which would attract liability to gift-tax. In support of its conclusion, the Tribunal relied on the decision of the Gujarat High Court in Commissioner of Gift-tax v. Karnaji Lumbaji [1969] 74 ITR 343 (Guj). The Tribunal further held that there was goodwill which could exist in this type of business carried on by the assessee for the supply of sanna leaves and pods which had been carried on for a con....