MARKOSE V O Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) TWO questions have been referred to us by the Income-tax Appellate Tribunal, Cochin Bench, which read as follows:

(2.) FOR the assessment year 1968-69, Sri V. O. Markose, partner, M/s. V.J. Joseph & Markose, Lawyers, Kottayam, claimed that 50% of his share in the assets of the said firm was transferred to one Sri V. O. Abraham who was admitted to the partnership with effect from August 17, 1966, and that such transfer did not constitute a gift. He further contended that, even if it amounted to a gift, that gift was exempted by virtue of Section 5(1)(xiv) of the Gift-tax Act, 1958. Both these contentions were negatived by the Income-tax Officer, in appeal by the Appellate Assistant Commissioner, and in further appeal by the assessee, by the Tribunal.

(3.) THE gift must be "in the course of carrying on a business" and further "it must be bona fide for the purpose of the business", A number of decisions had been cited before us by counsel for the assessee and by counsel for the department. But we do not think we should in the light of the two categorical pronouncements of the Supreme Court refer to all these decisions. We shall, however, refer to one case on which much reliance had been placed by counsel for the department merely for the purpose of saying that it will have no application to the question before us. THE decision is in AK. Venkiteswaran v. Commissioner of Income-tax. THE section that was construed by a Division Bench of this court in that case is Section 16(v) of the Income-tax Act, 1961, for short " the Act", That section is in these terms :