TMI Blog2004 (6) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... SANKARASUBBAN., A. K. BASHEER. JUDGMENT The judgment of the court was delivered by S. Sankarasubban J. - The above case has been referred to us by the Income-tax Appellate Tribunal, Cochin Bench, on a reference by the assessee. The assessee is a partner in the Firm of M/s. Hindustan Engineering Company, Calicut. A reconstitution deed of the partnership was executed on May 25, 1982. That deed shows that there are three partners, K. Govindan, K.P. Prabhakaran and K.G. Krishna kumar. It is further seen that K.G. Manoj kumar was a minor and he was admitted to the benefit of the partnership. The capital of the firm was Rs. 25,000 provided by the three partners and the minor in the proportion of Rs. 10,000, Rs. 5,000 and Rs. 5,000, respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the circumstances of the case, the Appellate Tribunal was justified in holding that the applicant was liable to gift-tax on surrender of his share on a reconstitution of the firm? 2. Whether there were materials for the Tribunal to come to the conclusion that the alleged gift made by the applicant was without consideration in money or money's worth within the meaning of the Gift-tax Act?" Learned counsel for the assessee contended that there was no gift. There was only a reduction in the share of profit of the assessee and that does not amount to a gift. On the other hand, learned counsel for the Revenue submitted that there was no consideration for the transfer and hence, it is a gift. In CGT v. D.C. Shah [2001] 249 ITR 518, the Supr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vour of the incoming partner. In our view, the contribution of Rs. 25,000 towards the capital together with the obligations undertaken of sincerely and faithfully carrying on the business for the common advantage of the firm was adequate consideration for reallocating the share of the profits and giving 12 per cent, of the share in favour of the incoming partner ..." Learned counsel for the Revenue submitted that in so far as the decision in Sree Narayana Chandrika Trust v. CGT [2003] 261 ITR 279 is concerned, the Supreme Court has taken into consideration the fact that an amount of Rs. 25,000 was contributed by the incoming partner. He tried to distinguish the present case on the ground that there has been no fresh contribution. On the o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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