COMMISSIONER OF GIFT TAX Vs. G G MORARJI

JUDGEMENT

(1.) THIS is a reference under sub-s. (1) of s. 26 of the GT Act (hereinafter called as "the Act") at the instance of the CGT.

(2.) FACTS giving rise to this reference are: We are here concerned with the asst. yr. 1958-59. The assessee, Gordhandas Goculdas Morarji, has been assessed in the status of an individual. The Bombay Municipality acquired certain immovable property belonging to the assessee, paying the assessee a compensation of Rs. 2,90,000. Out of this amount, Rs. 2,85,000 were deposited by the assessee in the following manner :

(3.) MR. Mehta, learned counsel for the assessee, on the other hand, contends that no doubt the claim made by the assessee in the beginning was that he was entitled to exemption in respect of the entire amount of Rs. I lakh. But before the Tribunal, according to MR. Mehta, it was also contended that even though the assessee may not be entitled to exemption in respect of the entire amount of Rs. I lakh, the assessee would be entitled to the exemption to the extent of the amount ascertained to be the value of the gift made by the assessee in favour of his wife under the trust deed. MR. Mehta further stated that he himself had appeared for the assessee before the Tribunal and had urged this point before the Tribunal. He further made it clear that before us he was not contending that the assessee should be given any exemption in respect of the entire amount of Rs. 1 lakh. The argument of MR. Mehta is that under the trust the assessee has provided that the income of the said amount of Rs. 1 lakh was to be given to his wife during her lifetime. That amounts to creation of an interest in the property, and there is a transfer of property to that extent involved in favour of the assessee's wife. There is, therefore, a gift within the meaning of s. 5(1) (viii) of the Act, and the assessee is entitled to exemption to the extent of the value of the gift determined under s. 6 of the Act.