Income Tax Appellate Tribunal - Mumbai
Mrs. Roshan D. Nariman vs Assistant Commissioner Of Income-Tax on 19 January, 1994
Equivalent citations: [1995]52ITD269(MUM)
ORDER
M.K. Chaturvedi, Judicial Member
1. This appeal by the assessee is directed against the order of the C.I.T.(A)-XV, Bombay and pertains to the assessment year 1988-89.
2. The short question neatly identified by Shri. M. Subramanian, Id. counsel for the assessee, is whether the sum of Rs. 23,67,835, being the convertible value in rupees of the prize money of £ 1,00,000 on Premium Savings Bond, held in the name of the assessee, of the face value of £50, alleged to have been received as gift consequent upon the declaration of prize, is exigible to tax ?
3. Briefly the facts:-The assessee is a citizen of India and domiciled in India. For the relevant assessment year, she was a resident in India. She is following mercantile system of accounting. Her accounting period ended on 31-3-1988. In her return, she reflected share of profit received from M/s. Zorashtrian Dairy. Along with the return of income, the assessee filed in ward remittance certificate number 00450 dated 23-12-1987 from Bank of India, Bombay. As per the certificate a sum of £1,00,000 was credited by the said bank in the assessee's A/c No. 21909 in Central Bank of India on 21 -12-1987. The amount was remitted by the Department of National Savings, U.K. through Bank of India, London Branch.
This amount was stated to be beyond the ken of Income-tax Act. It was stated that the assessee received the Premium Savings Bond in London on 3-12-1987, as a gift from Shri Kersi R. Bhadha, her first cousin, a British citizen, who purchased it in January 1986 in assessee's name. It fetched the prize in the draw held in Septemper 1987. The general conspectus of the main plank of the assessee's argument was that the prize was borne by Shri Kersi R. Bhadha and not by the assessee and, therefore, the amount was not exigible to tax in India.
4. Shri M. Subramanian, Id. counsel for the assessee, appeared before us. Relevant documents and papers were filed. It was contended that the donee's acceptance is, sine qua non, for the completion of the gift. The Premium Savings Bond was purchased in January 1986 without the knowledge of the donee. Our attention was invited on the declaration made by Shri K.R. Bhadha dated 3-12-1987 before the Commissioner for Oaths, which reads as under :-
I, Kersi R. Bhadha, a British citizen, resident at 34 Summerhouse Avenue HESTON Middlesex TWS9DA do hereby state, admit and solemnly declare as follows:
In the year 1986, I had purchased Premium Bonds of the face value of British Pounds Sterling £50.00 (fifty) in the name of Mrs. Roshan D. Nariman (my first cousin), as I considered her as my own sister, and as a lucky person.
I hereby make an unconditional gift here in London of the said Premium Bonds, together with the right to receive any prize thereon which has already been declared or which may be declared in future to the said Mrs. Roshan D. Nariman in consideration of my natural love and affection for her. I have now handed over the said Premium Bonds Certificate to Mrs. Roshan D. Nariman here in London.
Now onwards, I have no interest whatsoever in the said Premium Bonds or any prize in respect thereof and the said Mrs. Roshan D. Nariman has become the absolute owner thereof.
Sd/- Sd/- Before Me: Dated: 3rd December, 87 Dated 3rd December, 1987 C.R.B. COOKE COMMISSIONER FOR OATHS OWEN WHITE 32 36 SATH ROAD HOU.S.. OW MIDDLESEX TW3 3LF
5. The donee said to have accepted the gift on 3-12-1987. Our attention was invited on the oath made by the assessee before the Commissioner for Oaths, which is reproduced here as under :
I, Mrs. Roshan Dinshaw Nariman, an Indian citizen and permanent resident of Bombay, India, on a temporary visit to London declare that the statement made overleaf by Mr. K.R. Bhadha, is correct and I hereby accept, here in London, the gift of Premium Bonds certificate of the face value of £50.00 (British Pound Sterling Fifty) from him with thanks together with the right to receive any prize thereon that has already been declared or that may be declared in future.
Sd/- Sd/- Before Me: Dated: 3rd December, 1987 Dated: 3/12/87 C.R.B.COOKE COMMISSIONER FOR OATHS OWEN WHITE 32 36 SATH ROAD HOU...MIDDLESEX TW3 3LF
6. Shri Subramanian submitted that the unilateral action of Shri K. R. Bhadha of buying bond in the name of the assessee by itself does not amount to a gift. The gift is completed only when it is accepted. In order to make a valid gift, it is essential that the gifted property must vest in the transferee. There cannot to a gift, in law, without vesting of the property gifted in the transferee and such vesting cannot take place without the consent or the concurrence of the transferee donee. According to Id. counsel, conjoint reading of Section 2(xii), coining a definition of expression 'gift' and Section 2(xxiv), coining a definition of expression "transfer of property" makes it clear that before a transaction can be styled as a gift, it must be implied as a transaction of transfer by one donee to another, that is, there must be plurality of parties involved in the transaction. In other words, these provisions postulate that there must be a transaction between at least two parties. Thus, it must be bilateral or multilateral transaction. In that view of the matter, a unilateral transaction whereby a person purchases of his own, Premium Savings Bond, in the name of other, cannot be said to be covered by the definition of expression 'gift' in Section 2(xii) of the Gift Tax Act. To support this contention reliance was placed on CGT v. Mrs. Jer Mavis Lubimqff [1978] 114 ITR 90 (Bom.), CGT v. Dr. R.B. Kamdin [1974] 95 ITR 476 (Bom.), CGT v.- Ebrahim Haji Usuf Botawala [1980] 122 ITR 62 (Bom.) and Gulab Rai Govind Prasad v. CIT [1987] 165ITR163 (SC). It was further contended that there is no provision in the Gift-tax Act by which the gift can relate back to the date of purchase of Premium Savings Bond.
7. Adverting to the prescription of Section 115BB of the I.T. Act, Id. counsel submitted that since the prize received on the abovesaid gift cannot be equated with the lottery prize, therefore the provision of Section 115BB cannot be applied in the facts and circumstances of the present case.
8. Shri M.N. Bajpai, Id. D.R. appeared before us. At the outset, it was submitted that as on the day when the prize was declared, the Premium Savings Bond was in the name of the assessee. It is abundantly clear from the records that the assessee received prize directly. Since Shri K.R. Bhadha was not owning the Premium Savings Bond when the prize was declared, it cannot be said that title to that bond was transferred only subsequent upon the declaration of the prize. For making such transfer it is necessary that one must hold dominion over the object which is to be transferred. The Premium Savings Bond in question is not transferable. This fact is stated on the face of the Bond. Shri Bhadha had no legal claim over the prize declared thereon. Our attention was invited on the well known tenet of law embodied in the dictum: NEMO DEBET QUA NON HABET". The purport of the dictum is "he who hath not, cannot give". That is, no one can give better title than what he himself has.
9. It was further stated that in England for all practical purposes, the money was received by the assessee. It was not treated as a gift as per the English Law. It is not known that how, for the tax purposes, the amount was considered in England. Since the Premium Savings Bond is not transferable there can be no agreement to make transfer of the same by way of gift. Even if an agreement is effected, for such transfer, it ought to be treated as illegal and it shall have no value in the eye of law. What all could said to have been gifted in the instant case is a sum of £50 which Mr. Bhadha parted while purchasing the bond. Coming to the applicability of Section 115BB, it was contended that the amount of prize was picked out of the lot on random basis. This is exactly what the meaning of the word 'lottery' connotes. Section 115BB includes within its ambit winning from lotteries also: Our attention was invited on the dictionary meaning of word 'lottery'. Finally it was submitted that the amount in question was correctly taxed in the hands of the assessee.
10. We have heard the rival submissions in the light of material placed before us and precedents relied upon. The assessee is a resident in India and is doing business in partnership in Bombay. Mr. K.R. Bhadha is cousin of the assessee. He is permanently residing in England. Mr. Bhadha, In January 1986 purchased the Premium Savings Bond in the name of the assessee. In September 1987, the prize of £1,00,000 was declared. Money was claimed by the assessee and was repatriated to India. The assessee also sought permission from the Reserve Bank of India to hold the Premium Savings Bond. As per the scheme of the bond it may fetch prize in future also. An advertisement of the Premium Savings Bond which appeared in a British paper was produced before us. This reads as under :
I am giving you a Premium Bond Gift Token for Christmas which could win you £250,000. Then you could buyout Father Christmas.
11. It was stated on behalf of the assessee that her husband, Sri Dinshaw Nariman was to undergo Heart Bypass Surgery by Dr. M. Laxman Kamath M.D. at Mount Sinai Medical Centre, Milwanbee, U.S.A. She left India with her husband on 8-12-1985 and reached U.S.A. on the same day. Her husband was operated upon on 10-12-1985. After the discharge it was necessary to stay near the hospital for a period of three weeks so that he could attend the hospital as an out patient for check up. On 12-1-1986, assessee went to London where she stayed with Mr. & Mrs. B.R. Irani, owners of Heritage House Hotel at 47-48 Leinster Gardens, Hyde Park, London. She was there 01118-1-1986. She returned to India on 19-1-1986. The date of purchase of the Premium Savings Bond as stated on the face of it, is January 1986. No particular date is mentioned thereon. The following words are also there on the top of it "not transferable". Owner's name shown there is Mrs. R. D. Nariman and face value reflected thereon is £ 50. The following address is given on the said bond: Mrs. Roshan D. Nariman HERITAGE HOUSE HOTEL 47/48 LEINSTEF GARDENS HYDE PARK LONDON W2 3 AT It is pertinent to note that during her sojourn in London , assessee stayed at the same address.
12. The term " gift" connotes the transfer by one person to another of any existing movable or immovable property made voluntarily and without consideration in money or moneys worth. On examination of the facts of the present case, we find that as per the certificate, Premium Savings Bond was purchased in January 1986. The name of the assessee and the address where she stayed appears on the certificate. Considering the details, in the declaration filed by the assessee's cousin, Shri K.R. Bhadha, we find that if there was any gift, that was made in January 1986 only by depositing the amount of £50 towards the prize of Premium Savings Bond. The Premium Savings Bond is not transferable. The possessor cannot claim any title over the same. The prize was just a "HIDDEN POTENTIALITY". The gift of the Premium Savings Bond can be equated with the gift of a seed. If you cut down the seed you cannot get the tree there inside. But "HIDDEN POTENTIALITY" of its being a tree is in the seed. For that it is to be kept inside the soil. It needs proper water, light and manure. If climatic conditions are favourable, after the flux of time, it may grow into a tree. Seed not a tree. Of course, "HIDDEN POTENTIALITIES" or possibility of its being a tree is there in the seed. Likewise winning of the prize in the instant case was depend upon many imponderables - it permeated in a future eventuality - names were to be picked out of a lot on random basis - one may get - one may not get - purely a matter of luck and chance. This goes to show that prize element on the Premium Savings Bond was not an existing property at the time of its purchase. When it was pregnant with the prize, it was the property of the assessee as is evident from the document itself. The name of Shri K.R. Bhadha is not mentioned on the certificate. He had absolutely no title over the asset in question. Just by holding the possession over the asset he was not entitled to claim any prize declared thereon. It was payable only to the legal owner and not to the possessor. The dictum: "NEMO DEBET QUA NON HABET" is squarely applicable in the facts of the present case. It was not possible on the part of Shri Bhadha to transfer the Premium Savings Bond in the name of any other person. No one can confer a better title than what he himself has. The precedents relied on by Shri Subramanian are on different facts.
13. It is not necessary here to consider how tax treatment was given to the said receipt in England. Since the amount was received in the name of the assessee it could not have been subject to the taxation in the hands of any other person.
14. Coming to the applicability of Section 115BB, it is important to examine the meaning of the term "lottery". In the Attorney's Pocket Dictionary at page 297 the term is defined as under :
The distribution of prize by lot or chance; a distribution of prize by chance; a game of hazard in which small sums are ventured for the chance of obtaining a larger value either in money or other articles; an allotment or distribution of anything by chance; a procedure or scheme for distributing prize by lot; the drawing of lots.
Section 115BB has been inserted by the Finance Act, 1986 with effect from 1-4-1987 by which a special provision was made to tax income from winning lotteries, crosswords, puzzels, etc. Winning from lottery therefore comes within the sweep of Section 115BB. We find that in the instant case, winning of prize tantamounts to winning from lottery as centemplated under Section 115BB. We have perused the various reasons given by the revenue authorities. In our opinion, there is no infirmity in the impugned order. We, therefore, uphold the order of the CIT(A).
In the result appeal of the assessee stands dismissed.