COMMISSIONER OF INCOME TAX Vs. OM PARKASH MUNJAL

JUDGEMENT

(1.) THE respondent-assessee filed his return of income for the assessment year 1990-91. He declared an income of Rs. 2,84,930. During the course of proceedings, the Assessing Officer found that the respondent had made a revocable gift of 6,000 equity shares, of Hero Cycles (P.) Limited to Om Parkash Pankaj Munjal Associates during the accounting period relevant to the assessment year 1982-83. During the period from 1982-83 to 1990-91, Om Parkash Pankaj Munjal Associates received 28,000 bonus shares. THEy also got a dividend of Rs. 2,62,500. During the assessment of 1990-91, this amount was treated as income in the hands of the respondent on the hypothesis that the gift made by him during the assessment year 1982-83 was void. Thus, the amount was added to the taxable income of the assessee.

(2.) THE assessee filed an appeal. It was accepted by the Commissioner of Income-tax (Appeals). THE Revenue filed an appeal before the Tribunal. Vide order dated August 16, 2000, the Tribunal affirmed the order of the Commissioner (Appeals) and dismissed the appeal. Hence, this appeal under Section 260A of the Income-tax Act, 1961.

(3.) THE issue regarding the validity of the gift was raised by the Revenue in G. T. R. No. 1A of 1994. Vide order dated May 16, 2002 (see CGT v. Satya Nand Munjal [2002] 256 ITR 516 (P & H)), it has been held that a revocable gift made by an assessee is not invalid. It is recognised under the Gift-tax Act. THE issue has been answered against the Revenue. In view of this decision, counsel for the parties are agreed that the gift made by the assessee to Om Parkash Pankaj Munjal Associates cannot be held to be void. However, it is contended that the gift being revocable, the bonus shares also should be deemed to have reverted to the donor on the revocation of the gift. Thus, the income derived by the respondent-assessee after the revocation of the gift should be treated as his income.