PATEL U S Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS is a reference at the instance of the assessee under s. 66(2) of the Indian IT Act, 1922, and the following question has been referred to us :

(2.) WE are concerned in this reference with the asst. yrs. 1957- 58, 1958-59, 1959-60, 1960-61 and 1961-62, for which the corresponding accounting years are the calendar years 1956, 1957, 1958, 1959 and 1960. The questions in all these years are identical. The assessee is one, U. S. Patel, an individual. He is the brother of one, C. S. Patel. These two brothers had two business associates, K. H. Patel and R. H. Patel, who were also brothers. The four persons were concerned with two private limited companies called Ashok Construction Company (P) Ltd. (hereinafter referred to as "Ashok") and Modern Construction Company (P) Ltd. (hereinafter referred to as "Modern"). In para. 3 of the statement of case, the Tribunal has given the shareholdings in Ashok at the relevant period and has concluded that the assessee had a controlling interest in the said concern. Similarly, in para. 4 of the statement of case, the Tribunal has extracted the shareholdings in Modern and has concluded that the assessee's brother C. S. Patel and K. H. Patel and R. H. Patel together held a controlling interest in the said concern.

(3.) IT will be seen from what has been stated above that although on 21st September, 1955, i.e., the date on which gifts of the shares of Modern were made to the assessee's wife and children by C. S. Patel, K. H. Patel and R. H. Patel, these persons, i.e., the donors did not make any gift to their own respective wives and children or to their brother's or sister's son. Similarly, on the 11th February, 1956, when the shares of Ashok were gifted by the assessee, the assessee made gifts to the wife and minor sons of C. S. Patel as also to the wife and daughter of K.H. Patel and to the sister's son of K. H. Patel and R. H. Patel but not to his own wife or children. The Tribunal has noted that the transfer of the shares of the respective companies by way of these gifts as noted did not materially affect the controlling interest of the assessee in Ashok and of C. S. Patel, K. H. Patel and R. H. Patel in Modern. C. S. Patel A. U. Patel (Major son of U. S. Patel) 40 Rs. 750 paid up per share 60,000 . Vikram U. Patel (minorson of U. S. Patel) 40 . . . . 80 . . K. H. Patel Mrs. D. U. Patel (wife of U. s. Patel) 33 Rs. 1,000 paid up per share 33,000 R. H. Patel A.U. Patel 10 Rs. 750 paid up per share 50,250 . Vikaram U. Patel 10 . . . Mrs. D. U. Patel 07 . . . Miss K. U. Patel (Mionor daughter of U. S. Patel) 25 . . . Miss Veysha U. Patel (minor daughter of U. S. Patel) 15 Total 1,43,250 Donor Donee . No. of shares Amount Rs. U. S. Patel A. C. Patel (mionor son of C. S. Patel) 30 Rs. 1,000 paid up per share 90,000 . C. C. patel (mionor son of C. S. Patel) 30 . . . Mrs. Sushilaben C. Patel (wife of C. S. Patel) 30 . . . . 90 . . U. S. Patel Mrs. M. Kamlaben.K. Patel (wife of K. H. Patel) 50 Rs. 1,000 paid up per share 75,000 . Miss B. K. Patel (daughter of K. H. Patel) 25 . . . . 75 . . U. S. Patel S. K. Patel (sister's son of K. H. & R. H. Patel) 10 Rs. 1,000 paid up per share 10,000 . . . . 1,75,000