Document Fragment View
Fragment Information
Showing contexts for: settlor beneficiary same in Nandkishore Sakarlal (Individual) vs Gift-Tax Officer on 13 March, 1986Matching Fragments
K.R. Dixit, Judicial Member
1. All the above appeals arise out of the same facts giving rise to the same question. They are, therefore, dealt with by this common order.
2. The only question is whether the execution of certain deed subsequent to an earlier deed of trust amounted to taxable gift. Briefly, the facts are that the assessee executed a deed of trust on 11-4-1961 settling the income of certain shares belonging to him in favour of certain members of his family. The trust was irrevocable for a period of six years and one day from the date thereof and thereafter the settlor had power to alter or revoke any of the 'uses trust powers provisions' mentioned therein. The settlor transferred to the trustees the shares and handed over the certificates to them. Thereafter on 31-12-1970 the settlor increased the number of beneficiaries and provided that 15 years thereafter the corpus and the accumulation of income, if any, should be transferred to the persons mentioned therein. The material parts of the two documents are reproduced below :
6. In reply, again the learned counsel, on behalf of the assessee, made detailed submissions stating that the property transferred is shares under Section 2(xxi). To a query from the Bench as to how the value was deter mined, it was stated that under Rule 11 of the Gift-tax Rules, 1958 read with Section 6 of the Act, the value was determined. Referring to Section 2(xxiv)(a), it was questioned when was the creation of trust ? In modification, etc. there was no transfer of property. The Supreme Court held that clause (a) of Sub-section (1) of Section 4 required bilateral transaction- CGT v. N.S. Getti Chettiar [1971] 82 ITR 599. The decision in Ebrahim Haji Usuf Botawala's case (supra) was the case of settlor and not of the beneficiary. Reliance was also placed on various Court decisions including in particular : Smt, Ansuya Sarabhai's case (supra), Mrs. Jer Mavis Lubimoff's case (supra), Goli Eswariah's case (supra) and N.S. Getti Chettiar's case (supra).
A mere unilateral act on the part of a person cannot be regarded as a transaction within the meaning of Section 2(xxiv)(d) of the Gift-tax Act, 1958. Before the provisions of that Section can be considered, the Act must be one to which two or more persons are parties.
The assessee created a wakf in 1941 and constituted himself the sole trustee. Clause (19) of the indenture of wakf provided that 'the settlor may at any time or times during his lifetime by any deed or deeds with or without power of revocation and new appointment alter the provisions and/ or the beneficiaries of the trusts hereby created by adding to their number or excluding some of them or to increase or reduce their interest therein or remove any trustee or mutawalli from him or their office'. In view of this power, in 1964, the assessee executed a document whereby the beneficiaries under the original indenture of wakf got altered and the settlor's son became entitled to receive the income from the trustees. The settlor released and disclaimed his powers of revocation and new appointment and of altering the provisions and/or the beneficiaries of the trust. The GTO held that the dedication of the properties to the trust was completed in 1964 and he sought to assess the value of the trust property to gift-tax. The Tribunal held that by reason of the execution of the document in 1964, gift-tax was not attracted. On a reference :
Held, that the mere execution of the document in 1964 which was a unilateral act could not be regarded as a transaction and would not fall within the definition of 'transfer of property' under Section 2(xxiv)(d) and could not be regarded as a gift within the meaning of Section 2(xii). It had not been held by any of the taxing authorities or the Tribunal that the execution of the document was not bona fide as far as the assessee was concerned. The provisions of Section 4(1)(c) would not, therefore, apply. The execution of the document in 1964 did not amount to a gift. (p. 62) 12.1 It is no doubt true that in the instant case, the settlor was not a beneficiary either under the April 1961 deed or under the December 1970 deed. However, that fact by itself would not deprive the assessee to take support from the decision in the case of Ebrahim Haji Usuf Botawala (supra). Again, I entirely agree with the submissions made on behalf of the assessee that the signatures put by the trustees in the December 1970 deed would have no consequence in deciding the point at issue. In my view, the learned counsel for the assessee has rightly stated that the signatures put by the trustees in the December 1970 deed only indicate that the trustees have noted the changes made in the April 1961 deed and nothing more. In this connection, the decision in the case of S.G. Dugal and Co. (P.) Ltd. (supra), clearly helps the stand taken on behalf of the assessee. Even without their signatures on the December 1970 deed, the trustees are bound to follow the alterations made in the April 1961 deed, by the December 1970 deed.