COMMISSIONER OF GIFT TAX Vs. CHARANJEET SINGH

JUDGEMENT

(1.) THIS reference application has been moved by the Revenue under S. 26(3) of the GT Act, for a direction to the Appellate Tribunal to refer the following two questions which are said to arise out of the order dated June 5, 1986, passed by the Tribunal :

(2.) THE facts briefly stated are that one Jaswant Singh (hereinafter referred to as "the assessee") was running a hotel known as "Hotel Imperial" in his individual capacity and has showed the value of the building at Rs. 7,90,800. In the previous year relevant to the asst. year 1976 -77, the assessee had taken his two sons, namely, Shri Charanjit Singh and Shri Gurdeep Singh, as partners in the firm constituted under the name of M/s Imperial Hotel and the property which was his absolute property was considered as having been transferred to the firm and each of the partners had 1/3rd share in the same. The GTO issued a notice on September 29, 1983 to the assessee on the view that property to the extent of Rs. 5,27,200 had been gifted by the assessee to his two sons who had been taken as partners in that firm and after allowing the exemption of Rs. 5,000, gift -tax was levied on the sum of Rs. 5,22,200. The said order of the GTO was set aside by the CIT (Appeals) on the view that no reasons were recorded by the GTO for invoking the provisions of S. 17(1)(a) of the GT Act and that the notice was issued under S. 13(2) of the said Act after the expiry of one year from the asst. year 1976 -77 and the assessment was, therefore, barred by limitation. The Tribunal, on further appeal, held that the notice which was issued by the GTO was under S. 13(2) of the Act and that the CGT was right in holding that it was issued beyond time. The Tribunal also went into the merits and held that, in view of the decision of the Supreme Court in the case of Sunil Siddharthbhai and Kartikeya V. Sarabhai (1985) 49 CTR (SC) 172 : (1985) 156 ITR 509, no gift -tax liability could be imposed on the assessee. The Revenue moved an application to the Tribunal for referring the aforesaid questions for the consideration of this Court. The Tribunal rejected the said application and held that since the matter had been examined by the Tribunal on merits also and the matter was covered by the decision of the Supreme Court in Sunil Siddharthbhai's case (supra), the questions, raised by the Revenue on the legal aspect of the matter were purely of academic nature. Thereafter the Revenue has moved this application.

(3.) SHRI Singhal, learned counsel for the Revenue, has submitted that the Tribunal was in error in holding that the present matter is covered by the decision of the Supreme Court in Sunil Siddharthbhai's case (supra). Shri Singhal has pointed out that the said decision related to the assessment of income -tax and the question was regarding capital gain and that the said decision did not deal with assessment to gift -tax. On the matter of gift -tax, Shri Singhal has invited our attention to the decisions of the Supreme Court in CGT vs. Chhotalal Mohanlal (1989) 61 CTR (SC) 263 : (1987) 166 ITR 124 and CGT vs. Dr. George Kuruvilla (1970) 77 ITR 746. Shri Singhal has also placed reliance on the decision of this Court in D. B. GT Ref. No. 35 of 1981, decided on July 19, 1989 (CGT vs. Kishan Chand (1990) 184 ITR 31). Having considered the aforesaid decisions, we are of the view that the questions raised In the reference application which arise from, the order of the Tribunal dated June 5, 1989, require the consideration of this Court. The Tribunal is, therefore, directed to draw up the statement of case and refer the following questions for the consideration of this Court: