COMMISSIONER OF GIFT TAX Vs. BHOLARAM

JUDGEMENT

(1.) THIS is a reference under Section 26 of the Gift-tax Act, 1958, made at the instance of the Revenue against the order dated February 21, 1984 (annexure "C"), of the Income-tax Appellate Tribunal, Jabalpur, though the Tribunal has observed that the question of law does not arise.

(2.) THE facts giving rise to this appeal are that the respondent/assessee had 60 per cent. share in the firm, Indira Glass Emporium, Jabalpur, and other partners had 40 per cent. share therein. During the assessment year 1977-78, there was a change in the constitution of the firm and a third partner was inducted in the firm having 25 per cent. share and thereby reducing the share of the assessee to 40 per cent. and that of the second partner to 55 per cent. THE Gift-tax Officer was of the view that the firm had goodwill and introduction of a third partner in the firm amounted to gift by the assessee to the extent of 20 per cent. shares. He, therefore, valued the goodwill of the firm and taxed 20 per cent. of it to gift-tax.

(3.) WE have gone through the records and heard both learned counsel.