Indian Kanoon - Search engine for Indian Law

(iii) any transfer of a capital asset under a gift or will or an irrevocable trust; ......... "

30. This section would apply only if there was a transfer of capital asset under a gift. The consideration proceeding from Bhanumathi has been the subject of adjustment entries in the account books of the firm. A gift is a transfer of property without consideration and, as, in this case, there was consideration, this is not a case which falls under the concept of gift. The AAC has taken the view that because there has been assessment to gift-tax, this case would fall within the meaning of Section 47(iii). He is not right in this view. The section does not provide that so long as the transaction has been subjected to gift-tax, it would not be liable to capital gains. The provision contemplates an exemption from capital gains tax only if there is a "gift" as such. If by reason of any special provision of the G.T. Act, enacting a statutory fiction, any gift-tax liability arose, that would not invest the transaction for all other purposes with the character of a gift. A statutory fiction introduced in one enactment cannot be incorporated in all other Acts. Legal fictions are only for a definite purpose. They are limited to the purpose for which they are created and should not be extended beyond their legitimate field. CIT v. Amarchand N, Shroff . The expression "gift" will have, therefore, to be understood only in its ordinary sense, and not in its extended sense under the G.T. Act.