GIFT TAX OFFICER Vs. MAHASUKHLAL BHAILAL
LAWS(IT)-1989-1-3
INCOME TAX APPELLATE TRIBUNAL
Decided on January 17,1989

Appellant
VERSUS
Respondents

JUDGEMENT

M.A.A. Khan, Judicial Member - (1.)THIS is an appeal by Revenue from the order of the Appellate Assistant Commissioner of Gift-tax, A.R.II, Ahmedabad (A.A.C.) dated October 16,1985.
(2.)The assessee (since deceased) is an individual and the assessment year involved is 1977-78 with the previous year ending with S.Y. 2032. The assessee, along with his two sons, was a partner in the firm M/s Mahasukhlal Bhailal. This firm was carrying on the business of manufacturing and selling silver ornaments at Manek Chowk, Ahmedabad since long under the Partnership Deed dated January 28,1972. Up to March 31,1976, the constitution of this firm was as follows:
1. Shri Mahasukhlal Bhailal 40%

2. Shri Narendrakumar Mahasukhlal 30%

Shri Jitendrakumar Mahasukhlal 30%.

3. There was a change in the constitution of the firm with effect from March 31,1976 under a Partnership Deed executed on April 1, J976. By the change effected in the constitution, one more son of the deceased-assessee was admitted as a partner in the firm. Therefore, with effect from March 31,1976 the constitution of the firm was as follows:-

1. Mahasukhlal Bhailal 15%

2. Narendrakumar Mahasukhlal 25%

3. Jitendrakumar Mahasukhlal 25%

(3.)ASHWINKUMAR Mahasukhlal 35%.
4. The deceased-assessee filed a return of gift on 19.2.1979 declaring a gift of Rs. 10,000, other than the gift in question. However, the Gift-tax Officer (GTO) noted that in effecting the change in the constitution of the firm in the course of the year under consideration the share of the deceased-assessee was reduced from 40% to 15% and, therefore, there had been a gift of 25% of his share in the firm by the deceased-assessee in favour of his son, partner ASHWINKUMAR Mahasukhlal. The GTO was of the opinion that the reduction in the share of the deceased-assessee was without consideration and, therefore, it had amounted to a gift which he determined at Rs. 13,190. He, therefore, charged gift-tax accordingly after giving the statutory exemption of Rs. 5,000.



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