A RAMASWAMY MUDALIAR Vs. COMMISSIONER OF GIFT TAX

JUDGEMENT

(1.) THIS reference arises out of the gift-tax assessment for the asst. yr. 1964-65 and the question referred runs as follows : "whether, on the facts and in circumstances of the case, the Tribunal was right in holding that the computation of gift-tax by the gto was in accordance with the provisions of S. 6 A of the GT Act, 1958 " Sec. 6 A referred to in the question was a short-lived provision but so confusing to understand. The relevant facts which brought in the operation of this provision may now be given. Sir A. Ramaswami Mudaliar made gifts to his daughter-in-law, Mrs. Andal Damodaran, in this year and in some of the earlier years. In the relevant year, he made a gift of Rs. 16, 750 to her. In earlier year he had made a gift of Rs. 37, 982. In the relevant previous year for the asst. yr. 1964-65, he made gifts to other persons totalling Rs. 38, 122. If S. 6 A were not in operation, then the tax would be payable on the following two amounts, namely, (1) Gift made to Andal Ammal, Rs. 16, 750 and Gifts made to other persons Rs. 38, 122 totalling Rs. 54, 872. Because of the operation of S. 6 A, the gifts made in the earlier years were liable to be aggregated. As stated already, a gift of Rs. 37, 982 had been made in one of the four preceding years prior to the relevant previous year relevant under S. 6 A. As there was a basic exemption of Rs. 10, 000 available in that year the taxable gift with reference to the said amount was only Rs. 27, 982. The result of the operation of S. 6 A, therefore was to arrive at the taxable gifts of Rs. 54, 872 of this year and Rs. 27, 982 of the earlier year. After giving the basic exemption of Rs. 5, 000 available for this year, the balance of gift of this year along with the amount of earlier gift taken for the purpose of aggregation came to Rs. 77, 854. the GTO arrived at Rs. 13, 363. 50 p. as the tax for this year, on said sum of Rs. 77, 854. He had thereafter to give the rebate which is available under S. 6 A itself. At present, it is enough to mention that he applied the average rate of tax on Rs. 27, 982 being the taxable gift of the earlier year. The average rate of tax was taken as 17. 165 paise per rupee. THIS yielded a sum of Rs. 4, 803-11 P and it was deducted from Rs. 13, 363-50. The gift-tax payable was, therefore, determined at Rs. 8, 560. 39 P.

(2.) THE assessee disputed the manner of application of S. 6 A and contended that the rate of 17, 165 paise per rupee should have been applied only to the gift of Rs. 16, 750 made in the relevant previous year to mrs. Andal and not to the entire gift of Rs. 49, 872 as made by the GTO. THE aac did not accept this submission. In the further appeal to the Tribunal, the same contention was taken. THE Tribunal has worked out the tax calculation on the basis of an analysis of S. 6 A to which we shall presently refer. Suffice it to say now that the Tribunal found that the determination of tax by the GTO was correct and that the assessee's calculation did not deserve to be accepted.

(3.) NOW, comes the problem as to whether the assessee is eligible to a further deduction under sub-cl. (ii) of cl. (b) of S. 60 A. That is the only point in issue before us. On a reading of the entire provision and taking into account its background. we are satisfied that sub-cl. (ii) of cl. (b) would apply only for any later assessment year than the asst. yr. 1964-65. That is clear from the words, "after the 31st March, 1963", appearing in sub-cl. (ii ). We do not propose to add anything more on this part of the clause because it dose not lie for interpretation for this year. The assessee is not eligible for any further benefit under sub-cl. (ii) cl. (b) of S. 6-A. The question is answered in the affirmative and in favour of the Revenue. The revenue will be entitled to its costs. Counsel's fee Rs. 250/ -.