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2014 (10) TMI 104 - HC - Income TaxLiability to tax u/s 26 (1) of the Gift Tax Act, 1958 - Whether the applicant can be said to have gifted his one- third share in the building to his mother and as a consequence, liable to pay the gift tax and whether any act of transfer in one of the five known methods – Held that:- Two items of property were held by the members of the same family - while the building was held by the mother and the sons in equal shares, the open space was in the name of the two sons - Both the items became the assets of the partnership firm, which was brought into existence through a deed of partnership, dated 07.04.1986 - The assessment of the gift tax is only with reference to the house property – following the decision in CIT vs. Keshavlal lallubhai patel [1964 (11) TMI 9 - SUPREME Court] - it is difficult to infer that any transaction, similar to the one of gift, has taken place when the mother of the applicant became the absolute owner as a process of adjustment of shares between herself and her sons - what becomes clear is that a gift, as defined under Section 2 (xii) of the Act, which is fairly wider than the description of gift under Section 122 of the Transfer of Property Act, can be said to have taken place if only there is a valid and legal disposition. A firm is not a recognised legal personality and no partner can hold any item of the assets, exclusively for himself - the actual entitlement of the partner comes to be translated if only the dissolution takes place and the item of property is allotted to his share - The occasion for the member of a joint family or a co-owner or a partner to make a gift would arise only after his share is determined in the process of partition or dissolution, as the case may be - What has accrued as a result of partition or dissolution does not amount to any transfer at all - The assessing authority proposed to treat the accrual of the property to the mother of the applicant, as a result of partition or dissolution of firm; as a gift – This is contrary to the unequivocal law, laid down by the Honble Supreme Court. - Decided in favour of assessee.
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