Income Tax Appellate Tribunal - Amritsar
Gift-Tax Officer vs Mrs. Champa Rani Aggarwal on 4 August, 1994
Equivalent citations: [1994]51ITD539(ASR)
ORDER
R.K. Bali, Accountant Member
1. These two appeals by the Revenue involve similar issue and are, therefore, disposed of by a common order for the sake of convenience.
2. Briefly the facts in G.T.A. No. 3/Asr./1992 are as under.
The assessee, Mrs. Champa Rani Aggarwal is stated to have made gifts of Rs. 1.20 lacs during assessment year 1990-91 to six donees as under:-
(a) Sh. Rajinder Kumar Aggarwal Rs. 20,000
(b) Sh. Rajinder Kumar Aggarwal (HUF) Rs. 20,000
(c) Sh. Rishi Aggarwal Rs. 20,000
(d) Smt. Sarita Aggarwal Rs. 20,000
(e) Sh. Rajinder Kumar Aggarwal Rs. 20,000
(f) Miss Aarti Aggarwal Rs. 20,000
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Rs. 1,20,000
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The assessee's husband, who was operating the bank accounts of the intended donees, deposited these amounts in their Saving Bank Accounts. The funds, however, continued to remain with the firms where they were deposited prior to the intended gifts. Subsequently due to family circumstances, the intended donees refused to accept these gifts and returned the amounts by cheques to the donor - Mrs. Champa Rani Aggarwal, the assessee in the present appeal. It was under these circumstances that the original return filed by the assessee declaring taxable gift at Rs. 1 lac on 11 -6-1991 was revised by the assessee on 8-10-1991 declaring taxable gift at Rs. Nil. The GTO, however, held that the original return, filed on 11 -6-1991, reflected the correct state of affairs and the subsequent return filed on 8-10-1991, consequent to the return of the gifts by the donees on 28-9-1991, was only an afterthought to avoid payment of gift-tax. He accordingly framed the assessment in the case of the assessee and determined the taxable gift at Rs. 1 lac.
3. In G.T.A. No. 4/Asr./1992, the assessee-Sh. Mitter Pal Aggarwal, initially filed return declaring taxable gift of Rs. 1.20 lacs on 11-6-1991, which was subsequently revised on 8-10-1991 declaring taxable gift at Rs. Nil. Here also, initially the assessee is claimed to have declared gifts aggregating Rs. 1.40 lacs to seven different persons namely:-
Rs.
(a) Sh. Rajinder Kumar Aggarwal 20,000 (b) Sh. Alok Aggarwal 20,000 (c) Miss Nidhi 20,000 (d) Mrs. Rama Aggarwal 20,000 (e) Sh. Brij Mohan Aggarwal 20,000 (f) Sh. Sunil Aggarwal 20,000 (g) Sh. Brij Mohan Aggarwal (HUF) 20,000
Here also, on account of family circumstances - which were explained by the assessee before the G.T.O., the donees informed the assessee that they have never accepted the gifts made to them and because of making of these gifts the assessee's (donor's) sons have been accusing the donees of using undue influence and passing uncalled for remarks, which resulted in strained relations between the donees and the sons of the donor, the donees have returned the gifted amount by way of cheques dated 28-9-1991 and consequently, here also, the assessee has filed revised return of gift declaring value of taxable gift at Rs. Nil. Here also the GTO held that the original return was the correct return and the subsequent return declaring Nil taxable gift was with a view to avoid payment of gift-tax. He accordingly taxed the assessee at a figure of taxable gift of Rs. 1.20 lacs.
4. Both the assessees filed appeals and the Ld. Dy. CGT (Appeals), vide his order dated 12-3-1992, directed the GTO to accept the revised returns declaring taxable gift at Rs. Nil in the case of both the assessees holding that the donees, in both the cases, have not accepted the amount gifted to them. The Ld. Dy. CGT(A) was of the opinion that the intended gift, of movable property, is not complete unless it is accepted by the donee and since in the present cases the donees never accepted these gifts, the intended gifts never took place.
5. The Revenue is aggrieved with the orders of the Dy. CGT (Appeals) and has filed these appeals. Sh. Vinay Karan, Ld. DR, submitted that the Ld. Dy. CGT(A) has wrongly placed reliance on the decision of Hon'ble Kerala High Court in the case of CGT v. R. Kesavan Nair [1974] 96 ITR 365 in holding that the 'acceptance' of gift is an essential condition to constitute a valid gift. It was submitted that the Gift-tax Act does not envisage explicitly or implicitly 'acceptance' as an essential condition in making of a gift. It was submitted that the Ld. Dy. CGT(A) has not appreciated that the action involved in the making of a gift consumates with the acquisition of the gifted property by the donee. It was submitted that in the instant cases the donees had acquired the gifted sum simultaneously with the making of the gift as the said sums were credited into their respective bank accounts and as such the gifts have become irreversible. It was submitted that the subsequent disclaimer by the donees does not change the character of gift having been accepted by the donees earlier. It was submitted that the so called disclaimer by the donees has been adopted with a view to escape the gift-tax liability. Accordingly, it was submitted that the order of the Dy. CGT (Appeals) is required to be reversed in this regard. Reliance was placed on the decision of Hon'ble Andhra Pradesh High Court in the case of Vadulla Venkata Rao v. CGT [1972] 85 ITR 249 for the proposition that the acceptance of gift by the donee does not appear to be a specific requisite condition for a gift under the Gift-tax Act.
6. Sh. B.R. Abrol, Advocate, learned representative of the assessee(s) supported the order of the Dy. CGT (Appeals).
7. We have considered the rival submissions. Section 2(xii) defines the gift as under :-
- the transfer by one person to another
- of any existing movable or immovable property
- made voluntarily and
- without consideration in
- money or
- money's worth Section 122 of the Transfer of Property Act, 1922, on the other hand defines the gift in the following terms :-
... ... ...
Gift is the transfer of certain existing movable or immovable property made voluntarily and without consideration, by one person, called the donor, to another, called the donee and accepted by or on behalf of the donee.
From the above, it is clear that whereas acceptance by or on behalf of the donee, under the Transfer of Property Act, is a must, there is no such specific mention of acceptance by the transferee in the definition of a Gift given under the Gift-tax Act. However, while considering the definition of transfer under the Gift-tax Act vis-a-vis definition of transfer under the Transfer of Properties Act, the Hon'ble Mysore High Court in the case of Smt. Laxmibai Narayana Rao Nerlekar v. CGT [1967] 65 ITR 19 has observed as under: -
Definition in a special Act do not exclude the ideas or principles of general law, whether personal or statutory, governing situations dealt with by the special Act. In the absence of a clearly ascertainable intention expressed in unambiguous language to depart from or to displace the ideas or principles of the general law in regard to situations, specially dealt with by special Acts, it would be wrong to deprive oneself of the guidance available in the general law while dealing with special statutes. Although special statutes pick out certain situations for special treatment, they do not operate in a vacuum but generally build or construct a special scheme on the basis of an existing legal system departing therefrom or modifying its operation to the extent necessary from the point of view of the objection of specialisation. The proper and more accurate approach would be to see whether and to what extent the application of the principles of the general law is modified or departed from by the special statute.
There is prima facie no difference between the concept of a gift under the general law and under the Gift-tax Act except to the extent that the Gift-tax Act deems certain transactions to be gifts. Though under the general law and the special law, gift is a transrfer of property by one living person to any other without consideration the Gift-tax Act includes certain transfers with inadequate or pretended consideration within the definition of gifts, whereas, under the general law, existence of consideration, however, inadequate removes a transfer from the category of gifts. The Gift-tax Act creates only this fiction and does not create any further fiction which dispenses with the idea of transfer altogether or deems something which is not a transfer to be a transfer.
The Hon'ble Kerala High Court in the case of R. Kesavan Nair (supra), reference to which decision has been made by the Ld. Dy. CGT(A) in the impugned orders, has held that the acceptance of the donee is essential even under the Gift-tax Act. The expression 'transfer' as defined in Section 2(xxiv) reads as under:-
Disposition, conveyance, assignment, settlement, delivery, payment or other alienation of property....
Thus a conjoint reading of Section 2(xii) coining a definition of the expression 'gift' and Section 2(xxiv) coining the definition of the expression 'transfer of property' makes it clear that before a transaction can be styled as a gift, it must imply a transaction of transfer by one person to another that is, there must be plurality of parties involved in the transaction. In the present appeals, before us originally the amounts transferred by the donor to the donees were by cheques, which were credited in the accounts of the donees by Sh. Mitterpal Aggarwal, (one of the donors) who was the authorised signatory for the purpose of operating the bank accounts of the intended donees. The donors, in both these appeals are residing at Amritsar whereas the donees are residing at Delhi and were not aware of the gifts having been made to them. According to Sh. Abrol, learned counsel for the assessees, the donees came to know of these gifts only when sons of the donors (in the present appeals) met the intended donees at Delhi and accused them for taking undue advantage in the form of gifts from their parents and it was only after that that the donees wrote letters to both the assessees in September 1991 and returned the amounts by cheques. After receipt of these letters, the assessees filed revised returns declaring Mi gift as the original gifts were not valid gifts having not been accepted by the donees. Thus in both these appeals, the intended gifts were not complete as the donees never accepted these gifts and as such the Ld. Dy. CGT(A) was perfectly justified in directing the GTO to accept the revised Gift-tax returns filed by the assessees.
8. In the result, both the appeals filed by the Revenue are dismissed.