This appeal by assessee is against order of AAC dated 18-4- 1983 for assessment year 1978-79 for which previous year ended on 31-10- 1977. 2. assessee was partner in P. Vasudeva Kamath along with two others, each having one-third share. With effect from 1-11-1975 there was change in constitution by taking two more partners in addition to original three partners. On account of that assessee's share was reduced from 33 1/3 per cent to 15 per cent. capital contributed by five partners and share of each partner were as under: Capital Share Rs. P. Vasudeva Kamath 30,000 15 per cent P. Ganapathy Kamath 50,000 25 per cent S. Ravindranath Pai 50,000 25 per cent S. Rajendranath Pai 50,000 25 per cent P. Gurudatha Kamath 20,000 10 per cent GTO was of view that voluntary relinquishment of assessee's share was transfer of property as other partners got right to share in future profits of firm as also share of goodwill. He computed taxable gift at Rs. 37,070. 3. On appeal, AAC held that capital introduced by new partners was only for carrying on of business of firm. Hence, assessee's contention that there was no element of gift involved was not accepted by AAC. So far as working of value of goodwill not concerned, he gave some relief. Against said order of AAC assessee has preferred this appeal. 4. learned counsel for assessee kly urged that two incoming partners have contributed substantial capital, that on account of change in constitution of firm shares of existing partners got reduced, that on account of reduction of assessee's share from 33 1/3 per cent to 15 per cent there was no element of gift either in share of future profits or in goodwill, that no partner had any right in future profits, and assessee did not have any right in any one particular asset of firm. With regard to computation of value of gift he submitted that remuneration payable to partners should be allowed and interest on capital at market rate should be allowed. 5. learned departmental representative submitted that by relinquishing assessee's share by 18 1/3 per cent there was transfer of assessee's right in future profits as well as in goodwill which would constitute gift. Thus, he supported orders of lower authorities. 6. We have considered rival submissions. As pointed out already two incoming partners have contributed capital of Rs. 50,000 and Rs. 20,000, respectively. On account of their joining firm share of existing partners were reduced. contribution of capital by incoming partners is adequate consideration. There is no transfer of any asset involved by reducing assessee's share by 18 1/3 per cent. Thus, there is no gift involved. In partnership, when new partners are introduced in existing firm such new partners not only have share in profits of firm but subject to contract to contrary may be liable to share losses of firm. They may have to contribute capital or they may be taken as working partners. When they contribute capital or when they are taken as working partners there is adequate consideration. So question of transfer of right to share future profits by existing partners in favour of new partners does not arise. Merely because share in profits and losses allotted to one or other person is reduced, compared to position obtained earlier, in reconstitution of firm because of allotment made to new partners, it can not be assumed that allotment of shares to new partners is by reduction effected in share of existing partners. During subsistence of partnership no partner can deal with any portion of property as his own. Nor can he assign his interest in any specific item of partnership property to any one. His right is his interest in any specific item of partnership property to any one. His right is to obtain such profits, if any, which may fall to his share from time to time and upon dissolution of firm to share in assets of firm after satisfying liabilities set out in section 48 of Indian Partnership Act, 1932. This is well settled by by decision of Supreme Court in Addanki Narayanappa v. Bhaskara Krishnappa AIR 1966 SC 1300. It is also well settled by decision of Supreme Court in CGT v. P. Gheevarghese, Travancore Timber & Products [1972] 83 ITR 403 that one of assets of firm namely, goodwill, cannot be picked up and regarded as subject of gift. It was observed as under: "... departmental authorities, in present case never treated all assets and properties of assessees which were transferred to partnership pertaining to his property business as gift nor has any suggestion been made before us on behalf of revenue that property and assets valued at Rs. 4,00,000 were subject-matter of gift. All that departmental authorities did and position continued throughout was that they picked up one of assets of assessee's proprietary business, namely, its goodwill, and regarded that as subject of gift having been made to daughters who were other partners of firm which came into existence by virtue of deed of partnership. This approach is wholly incomprehensible and no attempt has been made before us to justify it ..." (p. 409) 7. In CGT v. V. M. Phillip [1985] 154 ITR 819 (Ker.), father decided to take son into partnership. son contributed Rs. 1 lakh towards capital. On above facts it was held that no gift is involved. In CGT v. J. N. Marshall [1979] 120 ITR 613, Bombay High Court held that it can be said that when new partner is taken and given share in profits and losses of firm, there is gift as such. It was also held that there is no gift of goodwill. In D. C. Shah v. CGT [1982] 134 ITR 492, Karnataka High Court held that contribution of capital by new partners would be sufficient or adequate consideration for being inducted as partners and there was no taxable gift as result of reallocation of shares. In CGT v. Chalasani Subbayya [1983] 295, Andhra Pradesh High Court held that on retirement of partner there is no gift of any property. It was further held that it is open to department to pick out one of assets of firm, namely, goodwill, and say that retiring partner had relinquished his share in goodwill and levy gift-tax thereon. This Bench of Tribunal by its order dated 28-6-1983 in GT Appeal No. 11 (Coch.) of 1983 and dated 7-8-1985 in GT Appeal No. 33 (Coch.) of 1983 held that contribution of capital by new partner is adequate consideration and no gift is involved. order of Tribunal Madras Bench 'B' in C. V. Jacob v. GTO [GT Appeal No. 67 (Coch.) of 1983 dated 25-11-1985] is distinguishable. Firstly, in that case contribution of capital of Rs. 6,000 was found to be inadequate for giving share of 20 per cent. Tribunal directed GTO to take value of gift at 10 per cent instead of 20 per cent taken by him. Even this order on those facts would go to show that contribution of capital by new partners in proportion with others is adequate consideration. We may point out that decision of Kerala High Court in V. M. Philip's case (supra) was not considered. Hence, that order is distinguishable. 8. On careful consideration of entire facts, in our view, new partners have contributed sufficient capital in proportion to their shares, compared with shares of other partners and that would constitute adequate consideration. Hence, there is no gift involved in reducing share of assessee from 33 1/2 per cent to 15 per cent. One of new partners, namely, S. Rajendranath Pai was also taken as working partner to assist managing partner. All new partners have agreed to share profits and losses. Thus, in our view, there is no gift, involved. 9. We would also deal with alternative contention with regard to quantification of gift. We find that as per Notification No. S. O. 301, dated 20-7-1977 issued under rule 10(4) of Gift-tax Rules, 1958 by CBDT and published in [1978] 112 ITR (St.) 14, interest at 12 per cent on capital should be allowed in computing gift. Thus, interest at 12 per cent on capital is allowable. 10. In result, appeal is allowed. *** P. VASUDEVA KAMATH v. GIFT TAX OFFICER