COMMISSIONER OF GIFT TAX Vs. KRISHNA T S

JUDGEMENT

(1.) THIS is a reference under s. 26(1) of the G.T. Act, 1958. The following question has been referred at the instance of the Commissioner of Gift -tax

(2.) THE assessee made gifts in the course of the accounting year 1969 -70, aggregating to Rs. 2, 04, 557. The gifts fell on two dates, viz., March 25, 1970, and March 26, 1970. The gifts made on March 25, 1970, amount to Rs. 1, 50, 000 and they are by way of cash. The balance of the gifts made on March 26, 1970, represent (a) shares held by the assessee in companies, (b) payment of insurance premium by the assessee for a policy taken under the Married Women's Property Act, and (c) a small quantity of gold valued at Rs. 260. The GTO in making the assessment made two additions to tile amounts of gift totalling Rs. 2, 770 in respect of shares held by the assessee in three companies, which were transferred to the donees. He, therefore, calculated the total gift at Rs. 2, 07, 327 and after allowing the statutory exemption of Rs. 10, 000, arrived at a sum of Rs. 1, 97, 330 as taxable gift, on which he levied gift -tax. He noticed that the assessee had made an advance payment of tax under s. 18 of the Act in a sum of Rs. 24, 900. He Worked out the rebate due to the assessee under s. 18 of the Act as being Rs. 1, 525. After deducting this rebate, he determined the refund due to the assessee at Rs. 959. In his view, the tax due on the second gift was short by a sum of Rs. II and, hence, it was not eligible for rebate. The second gift referred to is the group of gifts made on March 26, 1970

(3.) THE main para. of s. 18 enabled an assessee to pay within 15 days of his making the gift the amount of tax due on the gift calculated at the rates specified in the Schedule. If he did so, then, be has to be given credit for an amount equal to 10% of the amount of tax so paid. The Explanation contemplates a case where more than one taxable gift is made by an assessee, in the accounting year. In such a case, the gifts have to be aggregated. In other words, the assessee would have to pay the tax due in respect of each gift within a period of 15 days of making the gift. As far as the first gift is concerned, the assessee would be entitled to exclude the minimum amount not liable to gift tax and that was Rs. 10, 000 in the relevant year. Tile later gifts would all have to be taken as they are, because the exemption limit has already been crossed. When the second gift was made, the taxable part of the first gift would have to be added, to the amount gifted on the second occasion and so on subsequently and tax paid accordingly. The Schedule prescribes a graduated rate of tax depending on the quantum of the aggregate gifts. It is this Schedule that we have to apply at the time when the assessee intends to take advantage of the provisions of s. 18In the present case, the shortfall of Rs.11 appears to have arisen by reason of the difference in valuation. The assessee had valued the shares of Rani Lakshmi Engineering Spinning and Weaving Mills at particular figure. Similarly, he valued the shares of Bojaraj Textiles and Varadalakshmi Mills at a particular figure. The GTO disturbed these valuations and added a sum of Rs. 2, 770, as in his view, that would represent the correct market value of the shares. In the order of the GTO it has been pointed out that there has been a shortfall to the extent of Rs. 11. This shortfall would not have arisen if the assessee had been able to anticipate the actual working of the GTO. It would not ordinarily be possible for any assessee to anticipate what the assessing authority would do at the time when he takes up the assessment. So long as the valuation as made by the assessee is not found to be lacking in bona fides, the assessee would be in a position to pay the tax on the basis of his own valuation and would have to be given credit for 10% of the amount so paid as envisaged by s. 18. As pointed out by the AAC in paragraph 3 of his order