TMI Blog1975 (11) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... eference, we are concerned with assessment year 1960-61, the corresponding accounting period being Samvat year 2015 (12th November, 1958, to 31st October, 1959). One Nagji Dullabhji was carrying on the business of purchasing and selling cloth in the name and style of M/s. Vasantrai Nagji which was his sole proprietary concern. The main business of this concern was to purchase cloth from textile mills on credit and selling it thereafter. Nagji Dullabhji did not possess any quota rights or rights under agreements with purchaser textile mills. Because of his advanced age and failing health, Nagji Dullabhji decided to take his son, Girishchandra, as a partner to carry on this business. Girishchandra was already a creditor of the sole proprietar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tter was carried in appeal to the AAC before whom the same contentions as to sustainability under the G.T. Act as were originally raised before the GTO were repeated. The AAC held that the admission of Girishchandra as a partner in the firm of M/s. Vasantrai Nagji was without any consideration or without adequate consideration and a right and interest in the property and assets of the firm had been gifted, which was assessable to gift-tax. As regards the quantum, he reduced the value of gift to Rs. 94,658 from which amount the statutory exemption available under s. 5 was allowed. Gift-tax, accordingly, was sought to be levied on Rs. 84,658. The assessee, being aggrieved with this decision, carried the matter further by way of appeal to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e before us. A similar point has been considered by us only recently in Gift-tax Reference No. 3 of 1966, decided on 18th November, 1975 (CGT v. Lalita B. Shah--since reported in [1979] 118 ITR 794). The only distinction between the facts which were for our consideration in that reference and the facts which arise for consideration in the present reference is that in Gift-tax Reference No. 3 of 1966, a person carrying on business or profession as chartered accountant and tax consultant formed a partnership with his son, also a chartered accountant, to carry on the business or profession in partnership in almost the same name thereafter whereas in the present matter we have a partnership constituted to carry on not a profession, but what m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... athew J., as he then was, in the Kerala case) there was a transfer by way of transmission to the extent of 40% of the father's interest in the goodwill of the sole proprietary business which he carried on prior to 12th November, 1958. Section 2(xii) of the G.T. Act, 1958, defines " gifts ". The latter part of the said definition includes transfers or conversions of property referred to in s. 4 of the said Act which may be described as " deemed gifts ". It is important to note that no argument whatsoever was advanced before the Tribunal by the revenue under s. 4(a), and, therefore, we are not concerned in this reference with the question of there being any deemed gift and, therefore, a gift falling within s. 2(xii). Even conceding that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion. The only question which, perhaps, may require a little cogitation is, whether there is consideration in money or money's worth. On the facts of the present case, however, as has been found by the Tribunal, it is impossible to say that there was no consideration in money or money's worth. I have already referred to the fact that the son brought in capital of Rs. 25,000 and that he allowed to be retained in the partnership business the amount earlier advanced by him to the father's proprietary concern. It has also been found by the Tribunal that the partnership was formed by reason of the old age and failing health of Nagji. Even ignoring the last aspect of the matter for the time being, it is clear that there was consideration which ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... new partners had contributed part of the capital of the new firm. It was held, on these facts, that the transfer of Sardar Wazir Singh's rights in the business, including the goodwill, was for consideration. The partners were taken in so that the business would run better. The partners brought in some capital. There was no finding that the consideration was inadequate. According to the Allahabad High Court, the transfer was for consideration, and it was not a gift which would be liable to gift-tax. The facts placed before us by the Tribunal in this reference are substantially similar to the facts before the Allahabad High Court. It has been found that Nagji was constrained to form the partnership because of his old age and failing health. ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
