BHAVNA NALINKANT NANAVATI Vs. COMMISSIONER OF GIFT TAX

JUDGEMENT

(1.) The Income Tax Appellate Tribunal, Ahmedabad Bench "A" has referred the following question for the opinion of this Court under the Gift Tax Act,1958 (hereinafter referred to as "the Act") :

(2.) The applicant-assessee is an individual. The assessment year is 1980-81 and the relevant previous year ended on 31/3/1980. On 19/2/1979 the assessee created irrevocable trust with initial sum of Rs.1,000.00 by executing a deed of trust known as "Bhavana Nalinkant Trust" (hereinafter referred to as 'the Trust'). On 22/2/1979 the assessee addressed a letter to the trustees of the Trust informing that she was gifting certain shares which were of her individual ownership. Along with the said letter the transfer forms duly completed and signed accompanied by the share certificates were also forwarded to the trustees.

(3.) It appears that the market value of the shares passed on to the trustees on 22/2/1979 was Rs.52,744.00. The assessee filed a gift tax return on 30/6/1980 showing taxable gift at Rs.Nil. However, the Gift Tax Officer after allowing statutory exemption of Rs.5,000.00 worked out the taxable gift at Rs.47,744.00. The Gift Tax Officer was of the opinion that as the ownership over the corpus of the trust funds vested with the trustees, the assessee's claim that the donor and the donee were the same person was not acceptable. It is pertinent to note that the assessee, who was settlor of the trust was the sole beneficiary of the trust as per the trust deed.