TMI Blog2001 (9) TMI 7X X X X Extracts X X X X X X X X Extracts X X X X ..... D. A. MEHTA. JUDGMENT The judgment of the court was delivered by M. S. SHAH J.- This is a reference made by the Income-tax Appellate Tribunal under section 26 of the Gift-tax Act, 1958. At the instance of the Revenue, the following question is referred for the opinion of this court in . respect of the assessment year 1975-76 : "Whether, on the facts and in the circumstances of the case, the assessee was liable to gift-tax under the Gift-tax Act, 1958 ?" We have heard Mr. B. B. Naik, learned counsel for the Revenue, and Mr. M. J. Shah, learned counsel for the respondent-assessee. The assessee along with five others including the assessee's brother was carrying on business in the name and style of Abadi and Co. under a partners ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e [1974] 97 ITR 393 (Guj). The Tribunal dismissed the appeal filed by the Revenue. Hence, this reference at the instance of the Revenue. Mr. B. B. Naik, learned counsel for the Revenue, has submitted that the decision of this court in Chotalal Mohanlal's case [1974] 97 ITR 393 has been reversed by the Supreme Court in CGT v. Chhotalal Mohanlal [1987] 166 ITR 124 and, therefore, it must be held that the assessee had made a gift of the amount in question in favour of the assessee's mother and brother. Learned counsel heavily relied on the principle laid down in the aforesaid decision that goodwill is property and when partners are introduced or minors are admitted to the benefits of a partnership firm, the share of an existing partner is re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd learned counsel for the parties, we are of the view that there is considerable substance in the submissions made by learned counsel for the assessee. There is no dispute about the fact that upon his retirement from the firm, the assessee withdrew the capital from the firm. Hence, it was not a case of the assessee making any gift of his capital in the firm in favour of his mother or brother. The only controversy was about the assessee's share in the goodwill. That is the only amount which the Gift-tax Officer quantified for levying gift tax. In CGT v. T. M. Louiz [2000] 245 ITR 831, the apex court has in terms held as under : "The definition of 'gift' makes it clear that there has to be a transfer by one person to another of movable or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e goodwill of the firm also continues to remain the goodwill of the firm. In the facts of the case, we are satisfied that there was no transfer of property from the assessee to his mother and brother as the goodwill of the firm, Abadi and Co. continued to remain that of the firm notwithstanding the change of partners. We also find considerable substance in the submission made by the learned counsel for the assessee that the case of CGT v. Chhotalal Mohanlal [1987] 166 ITR 124 (SC) is distinguishable on the facts as in that case upon reconstitution of the firm, share of one of the partners-assessee (Chhotalal-C) was reduced from seven annas in a rupee to four annas, as three anna share was given to the assessee's minor sons who were admitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ratio of the decision in Chhotalal Mohanlal [1987] 166 ITR 124 (SC) is not correctly appreciated. As per the settled legal position (two Full Bench decisions of this court in Nizzamuddin Suleman v. New Shorrock Spg. and Mfg. Mills Co. Ltd. [1979] GLR 290 ; [1979] 55 FJR 115 [FB] and Gujarat Housing Board v. Nagjibhai Laxmanbhai [1985] (2) 26 GLR 1190 ; AIR 1986 Guj 81), if the views of the Supreme Court expressed in an earlier decision are explained in a subsequent decision of the Supreme Court, the explanation in the subsequent decision will have to be followed by the High Court, even if the subsequent decision is rendered by a smaller Bench of the Supreme Court. In view of the above principle, the decision in the case of Chhotalal M ..... X X X X Extracts X X X X X X X X Extracts X X X X
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