MANORAMADEVI UMRAOMALJI Vs. COMMISSIONER OF GIFT TAX

JUDGEMENT

(1.) BY this reference under s. 26(1) of the GT Act, 1958, (hereinafter referred to as the Act), the ITAT, Indore Bench has referred the following question of law to this Court for its opinion : 'Whether, on the facts and in the circumstances of the case, a p]ner on settling his accounts with the firm, is entitled to a share in the goodwill of the firm, if any ?'

(2.) THE material facts giving rise to this reference, briefly, are as follows : The assessee is an individual and the assessment year in question is 1975 -76. The assessee was a partner in the firm M/s Chandmal Kasturchand but in the accounting year relevant to the assessment year in question, there was a change in the constitution of the firm on account of retirement of the assessee from the firm. The GTO found that on settlement of accounts at the time of retirement of the assessee from the firm, as the assessee had not received any amount towards her share in the goodwill of the firm, from the remaining partners or from the incoming partner, the assessee would be deemed to have made a gift in favour of the partners to the extent of her share in the firm. The GTO accordingly held that the assessee had made a gift of the amount of Rs. 58,950 as that was the amount computed by him as the assessees share in the goodwill. Aggrieved by this decision, the assessee preferred an appeal before the AAC. That appeal was allowed. On further appeal by the Revenue the Tribunal set aside the order passed by the AAC and remanded the matter to him for disposing of the appeal afresh. Aggrieved by this order, the assessee sought reference and it is at the instance of the assessee that the aforesaid question of law has been referred to this Court for its opinion.

(3.) REFERENCE answered accordingly. In the circumstances of the case, parties shall bear their own costs this reference.