| Case ID |
42af774e-1cab-42d8-acdf-fe07f22fca6e |
| Body |
View case body. Login to View |
| Case Number |
D-2741 of 2016 |
| Decision Date |
Jan 01, 2002 |
| Hearing Date |
Jan 01, 2002 |
| Decision |
The court held that the relinquishment of the rights of the two retiring partners in respect of their shares was indeed a gift as defined under section 4(1)(c) of the Gift-tax Act, 1958. This ruling was based on the fact that the amount earned during the partners' tenure was not recorded in the books until the following accounting year, which led to the conclusion that the partners effectively passed on their rights without consideration, thus constituting a deemed gift. The court emphasized that the definitions of 'gift', 'donor', and 'donee' as per the relevant sections of the law were satisfied in this case. The decision also clarified that no gift is considered complete until it is accepted, which meant the appropriate assessment year for gift-tax would be 1972-73, corresponding to the assessment year 1973-74. |
| Summary |
In the landmark case adjudicated by the Calcutta High Court, the complexities of the Gift-tax Act, 1958 were examined, particularly in relation to deemed gifts under section 4(1)(c). The case involved two partners who retired from a firm, with their minor children introduced as new partners. The court ruled that the relinquishment of rights to a sum earned prior to their retirement constituted a gift, despite the sum not being recorded in the firm's books until a subsequent year. This case is pivotal for understanding the implications of partnership rights and the tax liabilities associated with gifts within family units, particularly Hindu Undivided Families (HUFs). The ruling underscores the necessity for proper accounting practices and the legal recognition of deemed gifts in tax assessments. It is essential for legal practitioners and tax advisors to be aware of such precedents when dealing with partnership agreements and tax planning strategies. |
| Court |
Calcutta High Court
|
| Entities Involved |
Not available
|
| Judges |
AJOY NATH RAY,
MAHARAJ SINHA
|
| Lawyers |
Not available
|
| Petitioners |
Commissioner of Gift-tax
|
| Respondents |
Surendra Paul
|
| Citations |
2002 SLD 2528 = (2002) 256 ITR 173
|
| Other Citations |
CGT v. T.M. Louiz [2000] 245 ITR 831/ 112 Taxman 622 (SC),
CGT v. Chhotalal Mohanlal AIR 1987 SC 1412
|
| Laws Involved |
Gift-tax Act, 1958
|
| Sections |
4(1)(c)
|