COMMISSIONER OF INCOME TAX Vs. JACOBS PRIVATE LIMITED

JUDGEMENT

(1.) THE Income-tax Appellate Tribunal at the instance of the Revenue referred the following questions for the opinion of this court :

(2.) THE assessee is a company in which the public are not substantially interested. It is engaged in the business of liquor distribution. With effect from April 1, 1979, the assessee was admitted as a partner into a partnership firm, known as J'kobs at Ernakulam. In accordance with Clause 4 of the partnership deed dated April 1, 1979, the assessee's contribution towards capital was fixed at Rs. 5 lakhs and the contribution by the remaining partners was determined at Rs. 25,000 each. THE assessee contributed towards capital in the firm its land and building, which was valued by the Department at Rs. 10,18,000 at the instance of the Gift-tax Officer. But in the books of the firm, the written down value of such asset was credited only at Rs. 6,12,844. THE difference between the two was treated as deemed gift, under Section 4(1)(a) of the Gift-tax Act and accordingly that was brought to tax for the assessment year 1980-81.

(3.) IN Sunil Siddharthbhai's case , [1985]156ITR509(SC) , the Supreme Court summed up the legal position as under (headnote) :