Law:

Section:

Section 26(3) of the Gift-tax Act, 1958 - Reference - Question of fact - Assessee converted his proprietary business into partnership concern through a partnership deed providing share of profit of 10 per cent to himself, 30 per cent each to his - major son and to his two minor sons - GTO held that this amounted to relinquishment of 90 per cent share by assessee in favour of his three sons, and was therefore chargeable to gift-tax within meaning of section 4 - Tribunal, however, found that major son had made contributions to firm's capital and as such there was no gift in law to this major son - It further found that there was no such transfer of assets in favour of minors who had neither contributed any capital nor rendered any service to firm nor were required to bear any losses - Tribunal accordingly remanded matter back to GTO to decide about said relinquishment of 60 per cent share in favour of minors - Whether Tribunal's finding was a finding of fact and thus no question of law arose there from - Held, yes Facts The assessee converted his proprietary business into a partnership con-cern toy a partnership deed according to which he had a share of profit of 10 per cent, his major son 30 per cent and his two minor sons 30 per cent each. The major son, being a working partner, was to contribute capital to the partnership and was liable to share the profit as well as losses, while the two minors were admitted to the benefits of the partnership, having neither to contribute any capital nor to bear any losses. The GTO found that none of the partners had made any contribution initially towards the firm's capital, that the major son being 20 years of age had no experience in the line of business carried on by the assessee and that his admission to the partnership could not be said to be with a view to expand the business as contended by the assessee. The GTO, therefore, held that by forming a partnership and relinquishing 90 per cent share in favour of the three sons, the assessee's action amounted to a gift within the meaning of section 2( xii). On appeal, the Commissioner (Appeals) also upheld the GTO's order. On further appeal, the Tribunal, however, found that…

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