COMMISSIONER OF GIFT TAX Vs. RAGHU K G

JUDGEMENT

(1.) AT the instance of the Revenue, the Tribunal has referred the following two questions of law for the decision of this Court :

(2.) THE respondent is an assessee to gift-tax. He was a partner in a firm, M/s K. K. Kunhandi and T. V. Govindan and others. It was doing abkari business. The respondent retired from the firm w.e.f. 31st March, 1977, and the firm was reconstituted. The GTO held that when the assessee retired from the firm, he relinquished his share in the firm in favour of the continuing partners without adequate consideration and so there is a transfer in the eye of law. Accordingly, the GTO made a gift-tax assessment and brought the value of the assessee's share to gift- tax, including the value of the assessee's share of goodwill, and he computed the taxable gift at Rs. 2,04,580. In appeal, the AAC cancelled the said assessment. The Tribunal concurred with the AAC and held that what the retiring partner received at the time of retirement is an asset which he was entitled to receive from the firm and so there is no gift or transfer of property. The Revenue filed an application under s. 26(1) of the GT Act to refer certain questions of law for the decision of this Court. Accordingly, the Tribunal referred the above two questions of law for the decision of this Court.

(3.) IN the light of the above decision of the Supreme Court, we are of the view that the Tribunal was justified in holding that there was no transfer of property in the instant case and so no gift is involved in the matter when the respondent retired from the firm and received amounts due to him. The Tribunal has held that, on the facts of this case, the firm has no goodwill. This is largely a question of fact. It is not a case where the Tribunal has omitted to consider any relevant fact or considered any irrelevant fact in reaching the conclusion that no goodwill is created or involved in the case even though the business was carried on for the period for which the licence was obtained. The finding entered by the Tribunal, in this regard, is purely a finding of fact and it is not open to any objection.