TMI Blog2004 (1) TMI 36X X X X Extracts X X X X X X X X Extracts X X X X ..... answer question No. 1 in the affirmative, i.e., in favour of the assessee and against the Revenue. - - - - - Dated:- 21-1-2004 - Judge(s) : M. S. SHAH., A. M. KAPADIA. JUDGMENT The judgment of the court was delivered by M. S. SHAH J. -In these five references, the following common questions of law have been referred for our opinion in respect of the assessment year 1981-82: "(1) Whether the Appellate Tribunal is right in law and on facts in holding that there was no deemed gift when the assessee relinquished his share in the partnership firm in favour of the new incumbent partner? (2) Whether the Appellate Tribunal has correctly appreciated the decision of the hon'ble Supreme Court in the case of CGT v. Chhotalal Mohanlal [1987 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... way of salary. The Deputy Commissioner of Income-tax (Appeals) held that the Accurate Trust has brought in capital of Rs. 8,12,602 while the existing five partners (i.e., the assessees) have withdrawn their capital to the extent of Rs. 8,73,954. The capital of the new partner, M/s. Accurate Trust, was Rs. 8,52,854. Hence, the question of deemed gift for relinquishment of their respective shares did not arise. He came to the conclusion that the capital contributed by the new partner constituted adequate consideration and there was no deemed gift involved. He, therefore, cancelled the gift-tax assessment orders passed by the Gift-tax Officer in all these cases and allowed the appeals of all these assessees. Hence, the Gift-tax Officer car ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n respect of the right to get future profits, but also in respect of the property in the goodwill. Since the Tribunal dismissed the appeal of the Revenue, the Revenue has come in reference. We have heard Mr. M. R. Bhatt, learned standing counsel for the Revenue, in all these five references. Though served, none appears for the respondent-assessees. In CGT v. Punjabhai Kalabhai [2000] 243 ITR 223 (Guj), this court has held that goodwill is an asset of a firm and like any other asset of the firm is capable of being transferred, but at the same time, retirement of a person from a firm and taking accounts at that time does not involve any transfer of property as such. Retirement of a partner and continued existence of the firm carrying on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the partnership firm in favour of the new partner. Since the five assessees received their capital to the aforesaid extent, it cannot be said that the assessees had relinquished their shares in the partnership firm in favour of the new partner without any consideration. As far as the decision in the case of CCT v,, Chhotalal Mohanlal [1987] 166 ITR 124 (SC) is concerned, that was a case where the existing partner brought in his minor sons to the partnership firm without any contribution of capital by the minor sons and, therefore, the apex court held it to be a case of gift. In the present case, the incoming partner having brought in his own capital, the ratio in Chhotalal Mohanlal's case [1987] 166 ITR 124 (SC) can never apply. Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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