S. K. CHANDER, A.M.: This appeal by Revenue is directed against order of AAC of GT dt. 2nd April, 1982 relating to asst. yr. 1978-79. Before we crystallise issue we would like to have look at factual canvass of case which is as under. There was firm working under name and style of M/s Mohri Ram Ram Lal, Commission Agents, Kaithal. It was constituted by three partners namely, S/Sh. Mohri Ram, Ram Lal and Amar Lal, having 1/3rd share in its profits and losses.This constitution continued up to 31st March, 1977. With effect from 1st April, 1977 Shri Rajinder Kumar, M. Com. S/o Shri Ram Lal, 25 years, Shri Harbhagwan, B.A. S/o Shri Amar Lal, 26 years and Smt. Kailash Wati W/o Shri Jaggan Nath were admitted as new partners. S/Sh. Rajinder Kumar and Harbhagwan were working with firm for about two years on date they were admitted as partners. They respectively contributed Rs. 21,060 and Rs. 10,000 as capital. Smt. Kailash Wati contributed Rs. 15,000 as her share of capital. clause in instrument of partnership provided that capital of firm/partners shall be as per books. These amounts were in books of firm in respect of new partners when they joined partnership firm. profits and losses sharing ratio of new partners, who were all sui juris, was 1/6th each. GTO took view that S/Sh. Mohri Ram, Ram Lal and Amar Lal surrendered their 50% share in profits of firm in favour of three persons who were taken as partners. According to him, this surrender of share in favour of others was gift made by original partners on 1st April, 1977 jointly to others. This, according to him, was liable to gift tax under GT Act. He, therefore, proceeded to work out value of this gift. According to GTO, "the right to share in profits of firm is property and surrender of this right in favour of others is gift. I am also of opinion that AOP is liable to gift-tax". According to him, this was value of goodwill of firm 50% of which had been gifted. Therefore, he took value of gifted asset at Rs. 49,340. After exemption of Rs. 5000 under 5 taxable gift was determined at Rs. 44,340. This was taxed and demand of Rs. 3434 created by order dt. 2nd Dec., 1980. When matter came up in appeal, AAC reversed this order of GTO relying upon judgments cited before him holding that new partners were taken in for purpose of extension of business and for getting fresh financial resources. As such, there was no gift, was in course of carrying on business and for purpose of business which was exempt u/5(1)(xiv) of GT Act. Hence grievance of Revenue. Relying upon judgment of Madras High Court in case of CGT vs. V. A. M. Ayya Nadar (1969) 73 ITR 761 (Mad) it was contended by Revenue that goodwill was asset which had been gifted and action of GTO was supported by this judgment. It was also submitted that if upon proper scrutiny of change in constitution of firm it appear that share of major erstwhile partner is reduced and amount of share reduction has been given to new partner, there may result assignment or alienation of property liable to gift-tax. AAC, therefore, erred in reversing order of GTO and allowing assessee relief. On other hand, ld. counsel for assessee submitted that Revenue is not examining issue in proper perspective because there was no alienation of property or transfer of goodwill in any form because in books of account goodwill did not exist and in fact there was no goodwill of firm which was doing business of commission agents. It was further submitted that new partners two of whom were working earlier with firm had also brought in capital and started functioning as working partners. reconstitution of firm was for induction of new blood and finance and it was in interest of business. reconstitution was in course of carrying on business of assessee and for purpose of business of assessee and as such no gift was involved. After careful consideration of rival submissions, we find out that no case was made out by Revenue for inference in order of AAC. Revenue has relied upon judgment of Madras High Court in case o f V.A.M. Ayya Nadar, referred to supra, but facts of that case were entirely different in so far as there was redistribution of share of profits as between one partner and certain others who are all partners, involving transfer of right which had effect of diminishing partner s interest and correspondingly increasing value of quantum of shares held by other partners. This is not case before us because there is induction of three new partners and ""there is no redistribution of shares of profits as between one partner and others who were already partners. Therefore, Revenue cannot seek any support from this judgment. In so far as reliance placed upon judgment of Bombay High Court in case of CGT vs. Premji Trikamji (1982) 133 ITR 317 (Bom) is concerned, it also gives no help to Revenue because there Hon ble Court observed that if upon proper scrutiny of change in constitution of firm by admitting minor to benefits of partnership, it appears that share of major erstwhile partner is reduced and amount of share reduction has been given to his minor child, who has been admitted to benefits of partnership, there may result assignment or alienation of property. In such case, transfer of property takes place. It would be clear in comparison with facts of case before us and ratio of this judgment that it does not fit into this case. In present case, there is no admission of minor to benefits of partnership and there is no corresponding reduction in share of partner whose minor has been admitted to benefits of partnership. On other hand, it is clear case of reconstituting firm with new blood and new finances brought in for purpose and for benefit of business of firm. On other hand, Andhra Pradesh High Court in case of CGT vs. Chalasani Subbayya (1983) 37 CTR (AP) 303: (1983) 144 ITR 295 (AP), has held that it is not open to department to pick out one of assets of firm, namely, goodwill, and say that retiring partner has relinquished his share in goodwill and levy gift-tax thereon. In case of transfer of partner s interest, what is transferred is his interest in partnership firm and not any particular share in any particular asset of partnership firm. Even if subject-matter of gift is treated as relinquishment of retiring partner s share in goodwill of firm, it is not exigible to gift-tax under provisions of GT Act. Examining issue before us on merits, we find firstly it is not anywhere recorded in books of account or in relevant partnership deed that there was goodwill of firm. In any case, in books of account on goodwill of firm was recorded. deed of reconstitution clearly shows that new partners came in with capital to contribute to finances of firm. Two of them had gained experience in working and were well educated. claim of Revenue that there was goodwill and that goodwill had been gifted in manner described by GTO does not find support from anywhere. In any case, it is clear that admission of new partners was for continuing business and was in business interest. As such there was no question of any gift tax involved in such reconstituted. gift-tax assessment made by GTO was without justification. It may also be noted that Andhra Pradesh High Court, while observing that there is no gift involved even if subject-matter of gift is treated as relinquishment of retiring partner s share in goodwill of firm, it is not exigible to gift-tax under GT Act, followed judgment of Supreme Court in case of CGT vs. P. Gheevarghese 1972 CTR (SC) 286: (1972) 83 ITR 403 (SC). It is thus clear that according to settled law, GTO had not found anything by way of asset which had been gifted by existing partners by taking three new partners on terms and conditions recorded in partnership deed which has been set out supra. AAC of GT. was fully justified in allowing appeal of assessee. Appeal dismissed. *** GIFT-TAX OFFICER v. MOHRI RAM RAM LAL & ANR.