Home Case Index All Cases Income Tax Income Tax + HC Income Tax - 2018 (12) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (12) TMI 645 - HC - Income TaxGift assessable under the GT Act - Whether on the proprietorship being converted into a partnership firm, the shares allotted to the sons of the appellant/assessee could be treated as a gift assessable under the GT Act? - Whether there would be a gift and the difference between the market value and the book value could be assessed under Section 4(1)(a) of the GT Act? - Held that:- Question arose would be answered in favour of the assessee. Though there was a transfer of the asset in favour of the firm, there cannot be any gift tax assessed on the differential value between the market value and book value. The value shown in the capital account of the firm is only the notional value and as long as the firm holds the property, there cannot be said to be any surrender of rights in the property by the assessee, in favour of the firm, since as a partner, she holds the properties along with the others. As long as the partnership subsists, there cannot be any claim raised by either of the partners as to separate right in the property in accordance with their respective shares. During the subsistence of the firm, the right of the partners is only to claim their share of the profits, in accordance with their respective shares and nothing more. We, having found that there is no gift, though there is a transfer of property, do not see any necessity to set aside the order of the Tribunal which only finds that there is a transfer of property in the name of the firm, which we have found to be not capable of being assessed under the GT Act. The Income Tax Appeal also would stand disposed of, since we have already found that there can be no gift found in the transaction.
|