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TMI Blog1986 (2) TMI 103X X X X Extracts X X X X X X X X Extracts X X X X ..... nt to 15 per cent. The capital contributed by the five partners and the share of each partner were as under : Capital Share Rs. P. Vasudeva Kamath 30,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ital, that on account of the change in the constitution of the firm shares of the existing partners got reduced, that on account of the reduction of the assessee's share from 33 1/3 per cent to 15 per cent there was no element of gift either in the share of future profits or in the goodwill, that no partner had any right in the future profits, and the assessee did not have any right in any one particular asset of the firm. With regard to the computation of the value of gift he submitted that the remuneration payable to partners should be allowed and interest on capital at the market rate should be allowed. 5. The learned departmental representative submitted that by relinquishing the assessee's share by 18 1/3 per cent there was a transfer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he existing partners. During the subsistence of the partnership no partner can deal with any portion of the property as his own. Nor can he assign his interest in any specific item of the partnership property to any one. His right is to obtain such profits, if any, which may fall to his share from time to time and upon the dissolution of the firm to share in the assets of the firm after satisfying the liabilities set out in section 48 of the Indian Partnership Act, 1932. This is well settled by the by the decision of the Supreme Court in Addanki Narayanappa v. Bhaskara Krishnappa AIR 1966 SC 1300. It is also well settled by the decision of the Supreme Court in CGT v. P. Gheevarghese, Travancore Timber & Products [1972] 83 ITR 403 that one o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the capital by the new partners would be sufficient or adequate consideration for being inducted as partners and there was no taxable gift as a result of the reallocation of shares. In CGT v. Chalasani Subbayya [1983] 144 ITR 295, the Andhra Pradesh High Court held that on the retirement of a partner there is no gift of any property. It was further held that it is open to the department to pick out one of the assets of the firm, namely, the goodwill, and say that a retiring partner had relinquished his share in the goodwill and levy gift-tax thereon. This Bench of Tribunal by its order dated 28-6-1983 in GT Appeal No. 11 (Coch.) of 1983 and dated 7-8-1985 in GT Appeal No. 33 (Coch.) of 1983 held that contribution of the capital by a new ..... X X X X Extracts X X X X X X X X Extracts X X X X
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