Document Fragment View
Fragment Information
Showing contexts for: settlor beneficiary same in Bhavana N. Nanavaty vs Gift-Tax Officer on 15 December, 1987Matching Fragments
4. Before the AAC, the assessee reiterated the submissions which were made before the GTO and urged that since in the instant case, the donor and the donee is the same person, it would not amount to transfer of property to other person. Apart from this oral submission, the assessee had also submitted written arguments, a portion of which has been extracted by the AAC in his order under appeal, which reads as under :
The property settled in the trust by the assessee Bhavana N. Nanavati is her self-owned property and she is the sole beneficiary of the9 trust. There is no transfer of property from one person to the other. In this case the donor and the donee are the same. The trustees are bound to act as per the instructions of the donor i.e. settlor who is a sole beneficiary of the trust. If trustees invest the trust fund, in this case it is the authority given by the beneficiary i.e. settlor, the donor, under that authority the trustees are acting, hence you cannot say that the assessee has no right to possess the corpus merely because a authority given to the trustees to invest the funds.
5. The AAC, however, upheld the action of the GTO, in the following manner :
I have heard the arguments of the appellant's counsel and perused entire material on record, I find that the contentions of the learned counsel for the appellant are not correct. The learned counsel for the appellant pleads that in this case the donor and the donee is the same person. If this situation is taken to be true then the very purpose of creation of trust is defeated and in that case the trust will be treated as invalid. Alternatively, in this case although the donor and the beneficiary are the same person but acting in different capacities, on one hand it is a settlor on the other hand it is beneficiary. Since the donation has been given by the settlor to the trust and not to the beneficiary therefore, the donation will amount to transfer of property to the trust and not to the self. Moreover, the Gift-tax Officer is not concerned with the internal arrangement between the settlor and the trust. What he is to see is whether there is transfer of property from one person to another without any consideration weighing the transaction from this point of view naturally there is transfer of property from one person to another as Smt. Bhavana N. Nanavati has donated the amount on the capacity a settlor to trust which is altogether a different entity. In view of this fact the Gift-tax Officer's action treating the amount of Rs. 52,744 as gift and taxing the same amount under the Gift-tax Act is fully justified and the same is confirmed.
(c) On the date of distribution to hold the Trust Fund and the investments for the time being representing the Trust Fund upon trust for the Settlor and if the Settlor is not alive for children of the Settlor as may then be living in equal shares.
The date of distribution shall arrive at the end of the period of 30 years and in case the Settlor of the trust expires earlier than the said period of 30 years, the period of distribution shall arrive on the date of the death of the Settlor.
(d) On the date of distribution none of the beneficiary mentioned in Clause (c) above are living to hold the Trust Fund and the investments for the time being representing the Trust Fund upon trust for brother of the Settlor Hemal Nalinikant, sister of the Settlor, Bhargavi Nalinikant and mother of the Settlor Pramilaben Nalinikant in equal shares.