CONTROLLER OF ESTATE DUTY Vs. ANILCHANDRA GOKALBHAI

JUDGEMENT

(1.) IN this reference under S. 256(2) of the IT Act, the Tribunal has referred the following questions for opinion of this Court :

(2.) GOKALDAS , the father of the accountable person died on 1st Nov., 1972. Between 19th Sept., 1957 and 28th Feb., 1967, he had made eight gifts of a total amount of Rs. 55,000. Those gifts were made in favour of his son, two daughters and three grand daughters. A further sum of Rs. 5,000 was gifted by him to his fourth grand daughter. All the seven donees later redeposited an equivalent amount with the donor who paid interest at a fixed rate. The donor had been earning dividend income by investing Rs. 60,000. The Asstt. CED held that the last gift of Rs. 5,000 attracted the provisions of S. 9 of the ED Act and therefore, the said amount was deemed to have passed on the death of the deceased. As regards other gifts, the Assistant Controller held that they were deemed to have passed, on the donor's death under S. 10 of the Act. The accountable person therefore, preferred an appeal to the Appellate Controller. Confirming the view taken by the Assistant Controller, the appellate Controller dismissed the appeal. The accountable person, therefore, preferred a second appeal to the Tribunal. The Tribunal held that there was no material to show that gift of Rs. 5,000 made to the fourth grand daughter was made within two years prior to his death and, therefore, S. 9 was not attracted. As regards applicability of S. 10 to the other gifts totalling Rs. 55,000, the Tribunal held that the Department had failed to establish that donees had failed to assume immediate possession and enjoyment of the amounts gifted to them and that donees had no money of their own when they parted with money in favour of the donor or that they had kept the money in a separate till until they parted with the same in favour of the donor. The Tribunal, therefore, held that S. 10 was not attracted in this case. It, therefore, allowed the appeal. The CED moved the Tribunal for referring the above stated question of law to this Court. But it appears that application made by the Commissioner was rejected. Thereupon, the Commissioner approached this Court and pursuant to the order passed by this Court on 21st Aug., 1978, this reference has been made.

(3.) IN CED vs. Babubhai Harjivandas (1981) 21 CTR (Guj) 204 : (1981) 129 ITR 276 (Guj), this Court has held that beyond the factum of the gifts in cash by the deceased to the different members of his family and the different donees and beyond the factum of those amounts being invested by the respective donees within a few days of the respective gifts with the firm in which the deceased was a partner, nothing else was established which would indicate that in his character as donor the deceased was not excluded from the benefit of the amounts gifted and that would not be sufficient to attract S. 10. The reason is obvious. Possession, enjoyment and exclusion contemplated by S. 10 must be in respect of gifted property. Therefore, unless the identity of the property gifted and the property reinvested is established, it will not be possible to say that both the conditions required by S. 10 are complied with. If we apply the law and test to the facts of this case, it becomes clear that the Revenue has completely failed in establishing that the second condition of S. 10 is not fulfilled in this case. The amounts which were gifted by the donor in this case were received by the donees. They were cash gifts. It is no doubt true that equivalent amounts were re deposited by the donees with the donor himself. But there is nothing on record to show that the same amounts that is amounts which were gifted were redeposited with the donor. The Department could have proved that the donees did not have other amounts. It could have thereafter proved that the amounts which were gifted were re deposited with the donor. No such attempt was made in this case. As the Department failed to establish identity of the amounts deposited by the donees with the donor. The Tribunal was right in holding that S. 10 did not apply to the facts of this case. In the result, the question referred to us in answered in the affirmative, that is against the Revenue and in favour of the assessee. Reference is disposed of accordingly with no order as to costs.