CHANDMAL GAURI SHANKAR Vs. COMMISSIONER OF GIFT TAX

JUDGEMENT

(1.) At the instance of assessee, following question has been referred for opinion of this Court under Section 26(1) of the Gift-tax Act, 1958 (in short Act) by the Income-tax Appellate Tribunal, Delhi Bench-D, New Delhi (in short 'Tribunal'):

(2.) Factual background in a nutshell is as follows: M/s. Chandmal Gauri Shankar (hereinafter referred to as the assessee) was a Hindu Undivided Family (in short H.U.F.). Gift-tax Officer issued notice under Section 16 of the Act, as it was noticed by him that assessee had gifted three properties to a trust for the benefit of its members during the assessment year in question. Such transfers were made on 15/07/1965 for the value of Rs. 75,000.00. Assessee did not file any return and accordingly notice under Section 15(4) of the Act was issued on23rd March, 1979. Return urn declaring "nil" gift was filed. It was claimed that benefit under Section 5(l)(xi) was available to the noticee. Gift-tax Officer did not accept the stand and held that the total amount of Rs. 75,000 .00 was a taxable gift and after allowing exemption under Section 5(ii) of the Act, sum of Rs. 65,000.00 was brought to tax. Matter was carried in appeal before the Appellate Assistant Commissioner (in short AAC). Said authority was of the view that provisions of Section 5(1)(xi) have no application to the facts of the case as the gift in question cannot be said to be one made in contemplation of death. He also held that Section 5(1)(xi) applies only to movable properties and not the immovable properties. That being the position appeal was dismissed. Matter was carried in further appeal before the Tribunal. It was held by the Tribunal that the provisions of Section 2(xxiv)(a) read with Section 2(xii) of the Act had no application to the facts of the case. Tribunal noticed that the validity of the trust-deed and its legal effects have been examined by it, in respect of the income-tax assessment of the assessee family for the assessment year 1966-67 in ITA No. 4447 of 1971-72 and by judgment dated 20/07/1973, it was inter alia held as follows:

(3.) We have heard learned Counsel for the Revenue. There is no appearance on behalf of the aasessee in spite of notice. Learned Counsel for the Revenue submitted that, in view of the conclusions arrived at in the income-tax proceedings Tribunal was justified in its conclusion.