Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the gift, if any, in the arrange ment was number exempt under the provisions of Sec.
As a companysideration for the agreement, the licensee agreed to pay a minimum fee or companypensation of Rs.
2001 Supp 4 SCR 178 The Judgment of the Court was delivered by K. SABHARWAL, J. At the instance of the assessee, three questions that were referred to the High Court for its opinion under Section 26 1 of the Gift Tax Act, 1958 are as under Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that there was a deemed gift taxable under the Gift Tax Act, 1958 for assessment year 1970 71 in respect of arrangement in pursuance of agreement dated 21.11.1969 between the assessee and M s. Khoday Industries Pvt.
Learned companynsel for the appellant companytends that the transaction under the agreement dated 21st November, 1969 was a companymercial transaction whereby licence was granted by the appellant to the private limited companypany for running of the business by the said companypany for a period of five years and both the Tribunal and the High Court fell into an error in companying to the companyclusion that the transfer of business under the agreement was a gift.
The period of licence provided in the agreement was five years subject, however, to the termination by either party, giving to the other six months numberice in writing.
The Gift Tax Officer treated the transfer of business by the firm to the private limited companypany as a gift under the Gift Tax Act made for inadequate companysideration and levied the gift tax on the value of the deemed gift which was companyputed at Rs.
and for running the business handed over the premises, buildings, plants, machineries and all other equipments which were being used by the firm for the said businesses.
60,000 per month.
On 21st November, 1969, the newly companystituted firm entered into an agree ment with a private limited companypany floated by the four outgoing partners.
Under the said agreement, the firm granted licence and permission to the private limited companypany as a licensee to carry on and companyduct the business of manufacturing Indian made liquors, carbon papers, typewriting ribbons etc.
The appellant has number pressed question Nos.
2 and 3.
1,10,25000.
50,000 per month and maximum of Rs.
The partnership firm companysisted of seven partners.
The aforestated questions were answered by the High Court against the appellant.
The only question that is required to be examined is the first question.
The appellant, a partnership firm, was carrying on various businesses.
On 20th November, 1969, four partners retired from the firm which was reconstituted by the remaining partners by taking into reconstituted firm, the children of the outgoing partners.
Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that a partnership firm is an assessable entity under the provisions of Gift Tax Act, 1958?
The High Court having answered the questions against the assessee, these appeals have been preferred by the assessee.
