TMI Blog1987 (4) TMI 73X X X X Extracts X X X X X X X X Extracts X X X X ..... spute about valuation of the goodwill as made by the Gift-tax Officer, with the conclusion that there has been a gift in respect of a part of the goodwill, the answer to the question referred has to be in the affirmative, that is, it constitutes a gift under the Act. The appeal is allowed and the conclusion of the High Court is reversed. - C.A. 2027 OF 1974 - - - Dated:- 16-4-1987 - M. M. DUTT., R. S. PATHAK., RANGANATH MISRA, JJ. JUDGMENT The judgment of the court was delivered by RANGANATH MISRA J.-This appeal is by certificate. Under a deed of partnership dated November 12, 1958, a firm by name M/s. Chhotalal Vedilal came into existence with three partners, Chhotalal Mohanlal (the assessee), Gunvantilal Chhotalal and Pra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w, he enhanced the quantum. In further appeal by the assessee, the Tribunal held that in the circumstances of the case, there could be no gift of goodwill. As appears from the statement of the case, the Revenue did not seek to support the order of the Income-tax Officer but pleaded for sustaining the order of the Appellate Assistant Commissioner. The Tribunal further found that the right to receive future profits could not be the subject-matter of a gift as the transfer did not relate to existing property. According to it, the situation did not give rise to any gift which could be made liable to tax under the Act. The following question relevant for the purpose of the appeal was referred to the High Court for its opinion at the instance of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 ITR 469 (Cal), after referring to a number of authorities of this court and different High Courts, a Division Bench of the Calcutta High Court concluded thus (at p. 479): From the cases cited above, it appears that goodwill of a partnership business is a property of the firm in which a partner is entitled to share. Although the above cases are under the Estate Duty Act, yet the principle laid down in the said cases regarding the nature of goodwill of firm and the right of a partner in respect thereof is applicable to the instant case. In this connection, it may be mentioned that according to section 14 of the Indian Partnership Act, property of a firm includes goodwill of the business. Further, according to section 29(2), if a partne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s was in favour of the minors who were admitted without any consideration. It held that the transaction constituted a gift by the assessee in favour of the minors. The ratio in Sirehmal Nawalkha v. Commissioner of Income-tax [1985] 156 ITR 714 (Raj) as also in Commissioner of Gift-tax v. Premji Trikamji Jobanputra [1982] 133 ITR 317 (Bom), support the stand of the Revenue that the transaction constitutes a gift . Once goodwill is taken to be property and with the admission of the two minors to the benefits of partnership in respect of a fixed share, the right to the money value of the goodwill stands transferred, the transaction does constitute a gift under the Act. Since there has been no dispute about valuation of the goodwill as ma ..... X X X X Extracts X X X X X X X X Extracts X X X X
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