COMMISSIONER OF GIFT TAX Vs. DIPAK A SHETH

JUDGEMENT

(1.) The Income Tax Appellate Tribunal, Ahmedabad Bench 'B' has referred at the instance of the Commissioner of Gift Tax, the following question of law for the opinion of this Court :

(2.) The assessment year is 1982-83 and the relevant accounting period is year ended on 31/3/1982. On 28/12/1982 the assessee filed return of gift showing the value of taxable gift of Rs.29,180.00. In the said return of income the assessee also claimed exemption under section 5(1)(ii) of the Gift Tax Act,1958 (hereinafter referred to as 'the Act') in relation to a sum of Rs.1 lakh gifted by him at Srinagar. The say of the assessee was that as the gift had taken place in the State of Jammu and Kashmir it fell outside the scope of Gift Tax Act by virtue of provisions of Section 5(1)(ii) of the Act. Some undisputed facts are : that the assessee had transferred a sum of Rs.1,05,000.00 from his Bank Account at Ahmedabad to the saving Bank Account with State Bank of Maharashtra, Srinagar Branch. The amount was withdrawn in Srinagar and handed over to the donee. The assessee produced a certificate from the Bank Manager to the effect that both donor and the donee were physically present in Srinagar when the gift was effected. The donee deposited the amount in its account in the same bank at Srinagar. According to the Gift Tax Officer as the amount was transferred from Bank at Ahmedabad and sent by Demand Draft to Srinagar it could not be stated that it had the character of movable property situate outside the territories to which the Act extended and hence exemption under section 5(1)(ii) of the Act was not applicable. The order of the Gift Tax Officer was confirmed by the Appellate Assistant Commissioner.

(3.) Being aggrieved the assessee went in appeal before the Tribunal and the Tribunal after hearing both the sides recorded the findings as : firstly, that the amount of Rs.1 lakh which had been gifted was clearly movable property situate in Jammu and Kashmir; secondly, the gift was made and accepted in the State of Jammu and Kashrmir; thirdly, on the basis of certificate dated 29/3/1982 issued by Manager, Bank of Maharashtra, Srinagar Branch it was held that both the donor and the donee were physically present in Srinagar. Lastly, the transaction of gift effected by the assessee was within the framework of law and could not be termed as dishonest and dubious and hence the ratio of Supreme Court decision in the case of McDowell & Co.Ltd. vs.CTO, 154 I.T.R.148 would not apply to the facts of the case.