TMI Blog1994 (6) TMI 25X X X X Extracts X X X X X X X X Extracts X X X X ..... his individual capacity till 31st March, 1971. He entered into a partnership with his four sons from 1st April, 1971 and the partnership so constituted took over the business of supply of electricity with all its assets and liabilities at book value. Value of the assets as on 1st April, 1971 stood at Rs. 4,16,400. The firm was named as M/s Billimora Electric Supply Co. On 10th Aug., 1973, the generation and supply of electricity business was taken over by the Gujarat Electricity Board for a consideration of Rs. 10 lakhs. Before take over, the firm had made certain additions in the assets. There were certain other assets which were not considered while taking the book value at the time of taking over the business by the Board. After allowin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on facts. The Assessing Officer for the detailed reasons discussed in the order, rejected the contention of the assessee and assessed the deemed taxable gift at Rs. 1,42,000. 4. On appeal, the first appellate authority confirmed the order of the Assessing Officer with the following observations: "3. I have given careful and diligent consideration to the above submissions and to the contents of the Gift Order. It must be admitted that the Assessing Officer has framed a gift-tax order of very high quality. He has met all the objections taken by the assessee in his order. In the submissions above, the appellant's authorised representative has advanced more or less the same contentions that were made before the GTO. Among other judgments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... partners without adequate consideration. The assets like monopoly licence to supply electricity to the town, the goodwill and other assets of the concern were so valuable that the G.E.B. paid Rs. 10 lakhs for them when it took over the business. As against this, the sons did not pay adequately for acquiring profit sharing and asset sharing rights in the firm. 5. The learned counsel for the assessee has reiterated the submissions made before the lower authorities and further submitted that the business originally belonged to the HUF and there was a partial partition of the HUF assets on 31st July, 1967. The assessee carried on the business in his individual capacity thereafter. However, the share amount of the sons received on partition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the sons to the partnership, the assessee retained right to the goodwill and licence of the business. Therefore, there was no relinquishment of right to the goodwill and licence of the business in favour of the sons. Therefore, there was no deemed gift with regard to the value of the goodwill and the licence. 5.2 He further submitted that the assessee was an old person and could not actively carry on the business without the active support from the sons. The sons rather threatened that in case they were not taken as partners, they would withdraw their amounts lying with the assessee. Since the business was mainly carried on with the funds of the sons lying with the assessee, it could not have been possible, had the sons withdrawn their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irm. The learned Departmental Representative, therefore, pleaded that the lower authorities were justified on given facts to tax the deemed gift of Rs. 1,42,000. 7. We have considered the facts and rival submissions and also gone through the various decisions cited both in support and against. We find that the business of supply of electricity to Billimora Town was earlier carried on by the HUF of which the assessee was the Karta. On tartial partition in 1967 of immovable assets, the assessee carried on the business of supply of electricity in his individual capacity. The amounts received by the sons on partial partition continued to remain in the business and they were paid interest thereon. Sons were also employed on salary. On constit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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