COMMISSIONER OF GIFT TAX Vs. MOHAMMED KHAN

JUDGEMENT

(1.) In this reference, the effect of the provision contained in Section 5(3) visa-vis Section 5(1) (viii) of the Gift Tax Act has to be considered.

(2.) The assessee is an individual and his wife had gifted him an amount of Rs. 25,000/- on 3-2-1972. On 30-10-1975, the assessee had in turn made a gift to his wife of the same quantum of Rs. 25,000/-. The assessee's wife was not subjected to Gift-tax, but the assessee was made exigible to pay Gift-tax for the gift amount of Rs.25,000/- made by him to his wife on 30-10-1975. The case of the assessee is that the gift amount made by his wife is noway concerned with the gift he made and as such, Section 5(3) of the Gift Tax Act is not applicable and he should be exonerated of payment of Gift-tax. It is apt to extract both the provisions, which stood in the statute book before their repeal:

(3.) A question arises as to whether the amount of Rs. 25,000/- gifted by the assessee's wife on 3-2-1972 has got any concern with the amount of Rs. 25,000/- gifted by me assessee to his wife on 30-10-1975. It is needless to mention that if there is no such concern and both are independent, then Section 5 (3) is not applicable. Otherwise, the assessee incurs the wrath of Section 5(3). For deciding the applicability of this legal provision, the factual matrix is necessary.