TMI Blog2018 (12) TMI 645X X X X Extracts X X X X X X X X Extracts X X X X ..... al account of the firm is only the notional value and as long as the firm holds the property, there cannot be said to be any surrender of rights in the property by the assessee, in favour of the firm, since as a partner, she holds the properties along with the others. As long as the partnership subsists, there cannot be any claim raised by either of the partners as to separate right in the property in accordance with their respective shares. During the subsistence of the firm, the right of the partners is only to claim their share of the profits, in accordance with their respective shares and nothing more. We, having found that there is no gift, though there is a transfer of property, do not see any necessity to set aside the order of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hildren, assessed under Section 4(1)(c) of the GT Act? (2) Whether on the assessee bringing the land and property of a proprietorship firm into a partnership firm, there could be a gift found on the basis of the difference between the book value and the market value? 3. We have looked at the history of the litigation and also noticed the facts to arrive at the real question of law as available from the orders appealed against. The assessee had two proprietary concerns by name M/s.Cochin Tourist Home, Ernakulam and M/s.Pulickal Pharmaceutical Distributors, Ernakulam. On 1.7.1979, the assessee entered into a partnership with her two sons, P.V.Antony and P.V.Louis, and both the proprietorship firms were converted into one single partners ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on two businesses into a partnership firm. The Reference was also disposed of remitting the matter to the Appellate Tribunal for recording a clear finding, after taking into consideration the rival submissions. The issue remanded, hence, was merely whether the building in which the hotel was run became an asset of the firm, when the proprietary concern was converted into a partnership firm. Here we have to observe that though there was a reference taken from the question as to whether the shares conceded to the sons on the constitution of the partnership firm would be the subject of an assessment under Section 4(1)(c) of the GT Act, it was given up before this Court. Hence, the answer to the question as given by the Tribunal in Annexure-C o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hereafter the operative portion of the order dated 28.12.2000 is extracted which speaks of recall of the order dated 20.01.2000, which is Annexure-E order. Annexure-C order could not have been recalled, since the reference to the High Court from that order was confined to the question as to whether there was any transfer of property. Then again, despite noticing the prayer in the M.A of the assessee, there was no consideration in Annexure-F order as to whether there was a gift as such in the transfer of property found to have been effected. More distressing is the fact that the Tribunal having found that there is a transfer; finds that the assessee fails and dismisses the appeal; which appeal is by the Revenue. We cannot but express our dee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. Jacobs (P) Ltd. rendered by a Division Bench of this Court reported in (1999) 237 ITR 433 (Kerala). 10. In Jacobs (P) Ltd., the assessee was a Company in which the public were not substantially interested and was engaged in the business of liquor distribution. The assessee-Company was admitted to a partnership and in accordance with the deed, the assessee's contribution towards capital was fixed at ₹ 5,00,000/-. The contribution by the remaining partners were determined as ₹ 25,000/- each. The question arose as to whether the credit entry in the capital account of the firm could be deemed as the notional consideration for the properties of the Company and gift tax assessed on the differential, taking the market value ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the capital account of the firm is only the notional value and as long as the firm holds the property, there cannot be said to be any surrender of rights in the property by the assessee, in favour of the firm, since as a partner, she holds the properties along with the others. As long as the partnership subsists, there cannot be any claim raised by either of the partners as to separate right in the property in accordance with their respective shares. During the subsistence of the firm, the right of the partners is only to claim their share of the profits, in accordance with their respective shares and nothing more. We, having found that there is no gift, though there is a transfer of property, do not see any necessity to set aside the o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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