COMMISSIONER OF GIFT TAX Vs. PURUSHOTTAM LIRA RAJA

JUDGEMENT

(1.) : Lira Raja of Calcutta, since deceased and now represented by Purushottam Lira Raja, his legal representative, the assessee, during his lifetime made a gift of Rs. 1 lakh to Purushottam L. Raja and others, trustees of Lira Raja Sahayak Trust by a cheque dated August 27, 1963. The said trust was also created on the same day, that is August 27, 1963.

(2.) PROCEEDINGS under the GT Act, 1958, were initiated against Lira Raja, the assessee. In the proceedings, the assessee contended that as Lira Raja Sahayak Trust was a charitable trust whose income was exempt from income-tax under s. 11 of the IT Act, 1961, the gift made to the said trust was exempt from GT under s. 5(1)(v) of the GT Act. The GTO did not accept the contention of the assessee and held that the gift was made first and the trust fund was created subsequently out of the gift and, therefore, the assessee was not entitled to the exemption claimed. He held that only where a gift has been made to an existing charitable fund or institution, the question of exemption from gift-tax would arise. The GTO disallowed the exemption claimed by the assessee under s. 5(1)(v) of the GT Act.

(3.) BEING aggrieved, the Revenue preferred an appeal before the Tribunal. The contentions of the parties made in the proceedings below were reiterated before the Tribunal. The Tribunal considered the said decision of the Bombay High Court and upheld the order of the AAC holding that the said Rs. 1 lakh should not be included in the gift-tax assessment of the assessee. The Tribunal noted that the gift which was made by way of a cheque was actually encashed on September 23, 1963, but did not record any finding on the same.