COMMISSIONER OF INCOME TAX Vs. G D MAHAJAN

JUDGEMENT

(1.) ASSTT . CGT, Investigation Circle, Panipat (wrongly mentioned as CIT, Haryana, Rohtak) has filed this petition under S. 26(3) of the GT Act, 1958 (hereinafter referred to as 'the Act') for issuance of a mandamus directing the Tribunal, Delhi Bench 'B', New Delhi, to refer the following question of law to this Court for its opinion, on the ground that the same arises from the order of the Tribunal:

(2.) RAJ Devi was partner in the firm M/s Mahajan Overseas, Panipat. She voluntarily retired from the firm on 18th Sept., 1979 and, thereafter, died. The GTO was of the view that Raj Devi had surrendered her right in favour of the other partners. As the assessee's share of goodwill had been determined at Rs. 4,54,000 in the order dt. 18th June, 1980 passed by the Asstt. CED, Karnal, the GTO also adopted the value of the gift at Rs. 4,54,000 and completed the gift-tax assessment accordingly. Assessee preferred an appeal before the CGT(A) who held that the value of the assessee's share in the goodwill of the firm was Rs. 40,000 as against Rs. 4,54,000 adopted by the GTO. He further held that no gift-tax liability was attracted on the facts of the case because according to him the relinquishment of her share by Raj Devi in the goodwill of the firm on 18th Sept., 1979 did not constitute a gift. Revenue filed an appeal before the Tribunal which was partly accepted. It was held that the CGT(A) was not right in holding that abandonment or relinquishment of assessee's right in the goodwill of the firm did not amount to gift on the date of retirement. View taken by the Tribunal was that the abandonment or relinquishment of the goodwill by the assessee amounted to gift on the date of her retirement. This finding of the Tribunal has not been challenged. Tribunal upheld the order of the CGT(A) regarding quantification of the assessee's share at Rs. 40,000. Regarding the later finding, Revenue filed a petition under S. 26(1) of the Act before the Tribunal to refer the question of law, reproduced in the earlier part of the judgment to this Court for its opinion.

(3.) REGARDING quantification of gift, the Tribunal in its order recorded the finding in the following words : "The GTO computed the value of assessee's share in the goodwill at Rs. 4,54,000, this was done on the basis of the order dt. 18th June, 1980 passed by the Asstt. CED. That order had, however, been set aside by the Tribunal as early as 30th April, 1985 and the Asstt. CED had been directed to recompute the value of the goodwill by taking into consideration certain claims put in by the accountable person. We were informed that the Asstt. CED had not passed any fresh order till date. The CGT(A) in his impugned order had gone into the merits of the assessee's claim and come to the conclusion that the value of the assessee's share in the goodwill of the firm on 18th Sept., 1979 was Rs. 40,000. The Revenue has not taken any specific objection to the value of the assessee's share in the goodwill being taken at Rs. 40,000. The learned Departmental Representative has also not addressed us on the subject nor has he pointed out any errors or infirmities in the computation given by the assessee and dealt with by the CGT(A). We have also looked into the computation of goodwill made by the assessee according to which the value of her share has been computed at Rs. 40,000. We find that this is proper and reasonable. We, therefore, hold that the value of the assessee's share in the goodwill was Rs. 40,000. We accordingly hold that there was a gift of Rs. 40,000 by the assessee on 18th Sept., 1979 relevant to asst. yr. 1980- 81. The GTO is directed to compute the gift-tax liability accordingly".