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TMI Blog1980 (6) TMI 55X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 15,000 therefrom and gifted it to his son, K.J. John (Jr.) the accountable person-respondent in this appeal. The donee deposited it in a bank on the same day. On 3rd April, 1967 the deceased converted the business into a partnership business by taking the donee and his another son Baby as partners. The three partners entered into a deed dt. 3rd April, 1967. It was provided in cl. 5 of the deed that the assets and liabilities of the business that was being carried on by the deceased shall be taken over by the new firm and the capital balance in the account of the deceased in the said firm as on 31st March, 1967 shall form his capital and that the second partner, namely, K.J. John (Jr.) should furnish Rs. 15,000 as his capital. The third p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt gifted by the deceased could not be said to have passed under s. 10 of the ED Act. Regarding the addition of Rs. 5,225 the Appl, Contr. rejected the contention of the accountable person that the firm had no goodwill. He, however, held that the goodwill of the firm should be computed after deducting interest at 15 per cent on the average capital employed and the managerial remuneration at Rs. 1,500 per month. Hence this appeal by the Department. 5. The first contention is as regards the deletion of Rs. 15,000 under s. 10 of the ED Act. The Deptl. Rep. Urged that since the deceased had gifted Rs. 15,000 in cash to the accountable person and since the latter had contributed the same as his capital in the firm in which the deceased was a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties(8) and in Clifford John Chick vs. Commissioner of Stamp Duties(9). After such consideration the Supreme Court has stated as follows: "When a property is gifted by a donor the possession and enjoyment of which is allowed to a partnership firm in which the donor is a partner, then the mere fact of the donor sharing the enjoyment or the benefit in the property is not sufficient for the application of s. 10 of the Act until and unless such enjoyment or benefit is clearly referable to the gift, i.e., to the parting with such enjoyment or benefit by the donee or permitting the donor to share them out of the bundle of rights gifted in the property. If the possession, enjoyment or benefit of the donor in the property is consistent with the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liar on his death under s. 10 of the ED Act, The Madras High Court, after referring to the above-mentioned decision of the Supreme Court in the case of CED vs. Kamalavati (7) and applying the principle laid down in it held that the benefit enjoyed by the deceased was not referable to the two gifts. 8. In Smt. Frenibai G. Anklesaria vs. CED M.P.,(3) the deceased had a 50 per cent share in a firm. He withdrew moneys on various dates from his capital account in the firm and gifted the same to his wife, who was also a partner of the firm with 10 per cent share. The wife of the deceased kept the moneys with her for sometime and later on invested the same in the firm on various dates. The question was whether the amount so gifted was to be incl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said to have passed on the death of the deceased. The Gujarat High Court held that Rs. 1,20,000 was includible under s. 10 of the ED Act, holding that the principle laid down in Chick's case(9) was applicable. This, no doubt, supports the contention of the Deptl. Rep. in the instant case. But then the above decision of the Gujarat High Court has been noticed by the Supreme Court in CED v Kamlavati.(7) Reliance had been placed by the Department on the decision of the Gujarat High Court. The Supreme Court, while stating that the principle of law had been correctly enunciated by the Gujarat High Court, further stated that in relation to the gift of Rs. 1,20,000 it was possible to take a view that it was part and parcel of the same transactio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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