JUDGMENT : B.K. Mehta, J. Assessee, Ramniklal Chhotalal, was a partner in the firm of M/s. Chhotalal Vadilal, Ahmedabad, and he had 25% share in the profit and loss of the business of the said firm. According to the partnership agreement, the goodwill of the partnership belonged to Shri Chhotalal Mohanlal who was one of the partners in the said firm having 25% share in the profit of the business. There was a third partner in the said firm, Viz., Gunvantlal Mohanlal, who had 25% share in the profit of the Business and there were two minors, namely, (1) Dipakkumar and (2) Kiritkumar, who were admitted to the benefits of the partnership and had respectively 13% and 12% shares in the profits thereof. It appears that the assessee retired on 23rd September, 1968, and with the consent of the other partners the assessee's minor son, Ashishkumar, was admitted to the benefits of the partnership and he was given 25% share in the profits of the business. When this Ashishkumar was admitted to the benefits of the partnership, the firm was reconstituted with changes in the respective shares of the partners under a new deed of partnership of 23rd September, 1968. According to the reconstituted partnership, Chhotalal Mohanlal reduced his share from 25% to 15%; Gunvantlal Mohanlal's share remained the same, i.e., 25% ; minor Dipakkumar's share was reduced from 13% to 10%, while Kiritkumar's share was increased from 12% to 25%. The share of the retiring partner, Ramniklal Chhotalal, which was 25%, was given to the minor, Ashishkumar, in the reconstituted partnership. 2. In response to the notice under section 16(1) of the Gift-tax Act, the assessee, Ramniklal, filed "nil" return and by his letters of October 13, 1970, and November 17, 1970, contended that by retiring from the partnership no gift had been made to his minor son, Ashishkumar, and that the goodwill of the partnership belonged to Shri Chhotalal Mohanlal, one of the partners. It was, therefore, submitted that gift-tax was not attracted according to the decision of this court in Commissioner of Gift-tax v. Karnaji Lumbaji [1969] 74 ITR 343 (Guj). It was, therefore, submitted that gift-tax was not attracted according to the decision of this court in Commissioner of Gift-tax v. Karnaji Lumbaji [1969] 74 ITR 343 (Guj). The Gift-tax Officer rejected all these contentions and preferred to follow the decision of the Madras High Court in Commissioner of Gift-tax v. V. A. M. Ayya Nadar [1969] 73 ITR 761 (Mad) and held that the partners right to share of profits of the firm was a valuable right capable of being valued either on the actuarial basis or any other reasonable basis. The Gift-tax Officer further stated that the retirement of the assessee before him from the partnership in favour of his minor son was only a family arrangement. The Gift-tax Officer did not find any materials to hold that the assessee retired in favour of his minor son, Ashishkumar, in the interest of commercial expediency. He, therefore, carved out the assessee's 25% share and after giving the statutory exemption, levied a gift-tax on Rs. 39,282 by his order dated January 14, 1971. 3. The assessee carried the matter in appeal to the Appellate Assistant Commissioner of Gift-tax who following the decision of the Income-tax Appellate Tribunal in the case of Chhotalal Mohanlal Doshi in G.T.A. No. 15 (Ahd.) of 1968-69 (which has been confirmed by now by this court in Commissioner of Gift-tax v. Chhotalal Mohanlal [1974] 91 ITR 393 (Guj) on other grounds) held that if minors were given right to share profits only, then there should be no question of subjecting any future rights to profits to gift-tax since that right could not have been said to be existing property. The Appellate Assistant Commissioner of Gift-tax, therefore, allowed the appeal of the assessee by his order of August 12, 1971. The revenue, therefore, carried the matter in appeal before the Tribunal which set aside the order of the Appellate Assistant Commissioner of Gift-tax and restored the order of the Gift-tax Officer as, in its opinion, the act of retirement of the assessee and admission of his minor son to partnership were simultaneous and by his retirement and arranged admission of his minor son to the benefits of partnership, the assessee did make the gift to his minor son of the right to share future profits in the firm and such right being valuable, was correctly made the subject-matter of gift-tax by the Gift-tax Officer. In that view of the matter, therefore, the Tribunal allowed the appeal of the revenue. The assessee, therefore, sought the reference and the following question has been referred to us : "Whether, on the facts and in the circumstances of the case, there could be said to be a gift by the assessee, Shri Ramniklal Chhotalal, to his minor son, Ashishkumar, which was taxable under the Gift-tax Act?" 4. The question referred to us is fully covered by the decision of this court in Commissioner of Gift-tax v. Chhotalal Mohanlal [1974] 97 ITR 393 (Guj). In that case this court was concerned with the earlier reconstitution of this very firm with which we are concerned in this reference. The original firm was constituted by a partnership deed of November 12, 1968. There were two other partners, namely, Gunvantlal and Pravinbhai besides Chhotalal. Gunvantlal and Pravinbhai had four annas and five annas shares respectively and Chhotalal had seven annas share in the profit and loss of the business. The said firm continued till the assessment year 1962-63. In the beginning of S. Y. 2018 which was relevant to the assessment year 1963-64 there was a change in the constitution of the firm. A new partnership deed was executed on November 9, 1961, between Chhotalal, Gunvantlal and Ramniklal, the present assessee in this reference before us. According to the said reconstitution Chhotalal's share was fixed at 25% instead of seven annas in the profit of the business ; Gunvantlal's share was fixed at 25% instead of five annas ; Pravinbhai retired and Ramniklal was brought into the firm. The two minor sons of Chhotalal, viz. Dipakkumar and Kiritkumar, were admitted to the benefits of the partnership and they were given 12% and 13% shares respectively. Ramniklal who was taken as a partner in place of Pravinbhai was given 25% share in the profit of the reconstituted partnership business. The gift-tax authorities sought to levy gift-tax on 19% of the share of Chhotalal which was given to the two minor sons. The revenue also sought to levy gift-tax on the 19% share of the goodwill of the firm. Chhotalal carried the matter in appeal before the Appellate Assistant Commissioner of Gift-tax who, following the decision of this Court in Karnaji Lumbaji's case [1969] 74 ITR 343 (Guj), held that there was no gift of the goodwill by Chhotalal. The revenue also sought to levy gift-tax on the 19% share of the goodwill of the firm. Chhotalal carried the matter in appeal before the Appellate Assistant Commissioner of Gift-tax who, following the decision of this Court in Karnaji Lumbaji's case [1969] 74 ITR 343 (Guj), held that there was no gift of the goodwill by Chhotalal. The Appellate Assistant Commissioner, however, held that there was a gift of the right to receive future profits in favour of the minors, Kiritkumar and Dipakkumar. He, therefore, evaluated the said right and sought to levy tax on it. Chhotalal, therefore, carried the matter in appeal before the Tribunal which confirmed the view of the Appellate Assistant Commissioner so far as the Appellate Assistant Commissioner held that there was no gift in the goodwill by Chhotalal. The Tribunal then considered the nature of the transaction by which the minors were admitted to the partnership whereby a portion of the share of Chhotalal was sought to be given to them by admitting them to the benefits of the partnership business. In the opinion of the Tribunal, the right to share future profits was not to be considered existing property and, therefore, it reached the conclusion that there was no gift of any property and allowed the appeal. On a reference at the instance of the revenue, the Division Bench of this court while rejecting the contention urged on behalf of the revenue observed [1974] 97 ITR 393, 397 (Guj) : "It was, therefore, urged that if by the reconstitution of the firm, the respondent-assessee has reduced his share by accepting 25% instead of 44% (which is equivalent to seven annas in a rupee) he diminished to that extent the value of his own property and releases or abandons the same in favour of the minors and to that extent it is a transfer of property which comes within the mischief of the definition of the word 'gift' and, therefore, must bear the liability of gift-tax. It is no doubt an ingenious contention which has been urged on behalf of the revenue. In the first instance, the benefits to which the minors, Kiritkumar and Dipakkumar, have been admitted under the reconstituted firm were to the extent of 12% and 13%, respectively, in the profit of the business of the new partnership firm. It is no doubt an ingenious contention which has been urged on behalf of the revenue. In the first instance, the benefits to which the minors, Kiritkumar and Dipakkumar, have been admitted under the reconstituted firm were to the extent of 12% and 13%, respectively, in the profit of the business of the new partnership firm. Under the old partnership, one Pravinchandra Vadilal was entitled to five anna's share (which is equivalent to about 31%). The new partner, Ramniklal Chhotalal, who joined the new partnership business from November 9, 1961, was given it share of 25% in the profit and loss of the business. In those facts, it,therefore, cannot be said that the share of 25% which has been given jointly to the two minors was any relinquishment or abandonment by the respondent-assessee. In the second place, assuming that the right to share in the profits of a partnership business is a property, even then, it cannot be said that when the firm was reconstituted and the minor sons were admitted to the benefits of the partnership business, there was consequently a relinquishment or abandonment of any debt, contract or other actionable claim or any interest in the property of any person. We, therefore, cannot up- hold the contention of Mr. Kaji that to the extent to which as a result of the reconstitution the share of the respondent-assessee was reduced, to that extent there was a relinquishment or abandonment of any interest in the property. The partnership has been defined under section 4 of the Partnership Act as the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all and the partners who have entered into partnership with one another are called individually 'partners' and collectively 'a firm'. It should be noted that the minors when they were admitted to the benefits of a partnership did not become by themselves the partners of the firm. They are admitted to the benefits of partnership with the consent of all the partners. It should be noted that the minors when they were admitted to the benefits of a partnership did not become by themselves the partners of the firm. They are admitted to the benefits of partnership with the consent of all the partners. It, therefore, cannot be said that when a firm is reconstituted and as a result of its reconstitution shares of some partners who have continued after the reconstitution have been diminished and the new partners who joined the partnership business after reconstitution have been given some shares by the adjustment of the shares amongst the old partners, there is a transfer of property within the meaning of section 2(xxiv) of the Gift-tax Act." 5. The question which, therefore, arises in this reference before us is fully covered by this decision. We have not been able to comprehend the contention urged on behalf of the revenue that mere retirement of a partner and admission of his minor son to the benefits of the partnership business by the other partners can constitute a gift by the retiring partner in favour of his minor son, The minor is admitted to the benefits of the partnership with the consent of the partners of the reconstituted firm and it does not depend merely on the volition of the retiring partner alone to claim as a matter of right that his minor son should be admitted to the benefits of the partnership. In that view of the matter, therefore, we do not think that the Tribunal was justified in taking the view as it did, that the fact of the retirement of the assessee, Ramniklal, from the partnership firm and the fact of his minor son, Ashishkumar, being admitted to the benefits of the partnership can be said to be sufficient to justify the inference or the conclusion that there was gift by Ramniklal in favour of his minor son, Ashishkumar, of the partner's share in the profits of the partnership business. In the facts of the case before us, as it was in the earlier case of Chhotalal Mohanlal [1974] 97 ITR 393 (Guj), there is merely a reconstitution of the firm inasmuch as Chhotalal reduced his share from 25% to 15% and the minor, Dipakkumar, who was admitted to the benefits of the partnership to the extent of 13% in the profits of the business was reduced to 10%. Ramniklal retired and his minor son, Ashishkumar, was admitted to the benefits of the partnership though no doubt the share of the minor was 25% in the profits of the business of the partnership firm. In our opinion, this is reconstitution of the firm and the admission of the minor, Ashishkumar, with the consent of the continuing partners, viz., Chhotalal and Gunvantlal, while reconstituting the firm cannot amount to gift by Ramniklal in favour of Ashishkumar. In that view of the matter, therefore, we hold that the Tribunal was not right in taking the view on the facts and circumstances of the case that the admission of the minor, Ashishkumar, to the benefits of the partnership with a share of 25% in the profits of the business of the firm amounted to gift by Ramniklal in his favour. We, therefore, answer the question referred to us in the negative and in favour of the assessee. The revenue shall pay costs of this reference to the assessee.