COMMISSIONER OF GIFT TAX Vs. SAJILATHA T M

JUDGEMENT

(1.) AT the instance of the Revenue, the Income-tax Appellate Tribunal (in short "the Tribunal") has referred the following two questions of law for the decision of this court :

(2.) THE respondent was a partner of a firm, K.K. Kunhandi, T.V. Govindan and Co., Trichur. We are concerned with the assessment year 1977-78, for which the accounting period ended on March 31, 1977. THE respondent retired from the firm with effect from March 31, 1977, and relinquished her share in favour of the continuing partners. THE short question that arises for consideration is whether there was any goodwill of the firm which was relinquished by the respondent when she retired from the firm. THE Gift-tax Officer held that when the respondent (partner) retired from the firm and somebody else was admitted into the partnership, the respondent had relinquished her share of the goodwill and determined the value of the respondent's share in the goodwill at Rs. 69,030 and treated it as a gift made by the respondent in favour of the continuing partners. In appeal, the Appellate Assistant Commissioner, following the decision of the Tribunal in G.TA No. 18(Coch) of 1980 dated December 31, 1981, held that since the firm, in which the assessee was a partner, did not have any goodwill at all, there was no question of relinquishment of any share in the goodwill and cancelled the assessment made by the Gift-tax Officer. THE Tribunal concurred with the said view and held that the Appellate Assistant Commissioner was justified in holding that no question of relinquishment of any share in the. goodwill arose for consideration. It is thereafter at the instance of the Revenue that the questions of law formulated hereinabove have been referred for the decision of this court.

(3.) WE answer the questions referred to this court in the affirmative, against the Revenue and in favour of the assessee.