Law:

Section:

Section 5(1)(xiv) of the gift-tax act, 1958-Exemption-Business gifts-Assessee retired as partner of a firm without taking her share in firm-Immediately on assessee's retirement, her minor children were admitted to benefits of said partnership firm-Whether it could be said that assessee relinquished her interest in firm 'in the course of' and 'for the purpose of' her business so as to make such gift of her share in firm exempt under section 5(1)(xiv)-Held, on facts, no Facts The assessee, a partner in a firm, relinquished her interest in the firm on her retirement. The GTO held that a taxable gift had arisen on account of relinquishment of the assessee's interest in the firm. Though the Tribunal agreed with the ITO that there was a gift, it held that the gift being made 'in the course of and 'for the purposes of the assessee's business, wasexempt under section 5(1)(xiv). In arriving at this conclusion, the Tribunal relied on its finding, inter ' alia, that the day after the assessee's retirement from the firm, three minor children of hers were admitted to the benefits of the partnership. On reference: Held 1. Section 5(7)(xiv ) is obviously intended to exempt what may be called business gifts. One is quite familiar with free gift schemes and other presents which modern businessmen make in the course of carrying on business and for furthering their business purposes. The gifts may be for a variety of business purposes. Free gifts are given by manufacturers of advertised products in a competitive market. A buyer of articles, such as soap powder or fans, is given free gifts of plastic buckets, stainless steel vessels and the like. Favoured customers may be given large scale discounts in the listed price of articles. People in business may sponsor a cricket match or other sport and give prizes to the best man in the field just to push their business. Industrialists are known to make presentations and give valuable articles to dignitaries who lay foundation stones for factories, cut the tapes for opening branches, or preside over jubilees. They may be presented with costly shawls, models of keys and trowels, building models and the like, made of silver, marble, ivory…

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