LAWS(KER)-1992-6-6

COMMISSIONER OF GIFT TAX Vs. SAROJINI R SMT

Decided On June 04, 1992
COMMISSIONER OF GIFT-TAX Appellant
V/S
R. SAROJINI (LEGAL HEIR OF LATE RAJAGOPALAN) Respondents

JUDGEMENT

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

(2.) THE respondent is one of the legal heirs of one late Rajagopalan. Mr. Rajagopalan was a partner in a firm. On April 1, 1978, he retired from the firm and received the amounts due to him on settlement of accounts. THE remaining partners carried on the business. THE Gift-tax Officer took the view that when Mr. Rajagopalan retired from the firm and received the amount which stood to his credit, he relinquished his share in the goodwill and the right to share the future profits of the firm in favour of the continuing partners. It was held that there was a deemed gift under Section 4(1) read with Section 2(xxiv) of the Gift-tax Act, 1958- Gift-tax was levied thereon. In appeal, the Appellate Assistant Commissioner held that the retirement of a partner from the firm did not involve any assessable gift under the Gift-tax Act. THE order passed by the Gift-tax Officer was cancelled. THE order passed by the first appellate authority was affirmed by the Appellate Tribunal relying on the decision of the Madras High Court in Addl. CGT v. P. Krishnamoorty [1977] 110 ITR 212. It is thereafter at the instance of the Revenue that the Income-tax Appellate Tribunal has referred the question of law formulated hereinabove for the decision of this court.

(3.) THE Registrar shall send a copy of this judgment, under his signature and seal of this court, to the Income-tax Appellate Tribunal, Cochin Bench.