TMI Blog1977 (7) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... r sons or daughters of the other brothers. Such gifts were effected by issue of cheques and evidenced by declarations of gifts. On voluntary returns filed by the brothers they were subjected to gift-tax under the G.T. Act. The particulars of the gifts and the names of the donees are as under : --------------------------------------------------------------------------------------------------------------------------------------------------- Donor Donee Amount Date Date of Rs. declaration --------------------------------------------------------------------------------------------------------------------------------------------------- 1. Bishwanath 1. Urmila Ramniranjan 20,000 23-7-62 24-7-62 Ratanlal 2. Pramila " 15,000 Ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by all the six married brothers. The transactions appeared to be of a mutual nature, each gift being the consideration for the opposite gift by one of the other assessees for the benefit of the assessee's child or children. According to him, each gift was adequate and equal in consideration by way of a corresponding gift from the other brother for the benefit of the children of the other. These transactions were collusive in nature ultimately amounting to sham transactions. He held that the transfers of the assets in question have been effected to persons through whom an indirect benefit of an equal nature accrued to the children of the other brothers. Accordingly, in the case of each one of the assessees the sum of, Rs. 50,000 was regarde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lth of the assessee. In the second appeals separately preferred by the assessees, the Tribunal reversed the orders of the WTO and the AAC. The Tribunal noted the provisions of s. 4(1)(a)(i) and (ii) of the Act as they then existed and noted the difference in the language of the two cls. (a)(i) and (a)(ii). In cls. (a)(i) which dealt with transfer of the assets by the assessee to his wife, there existed the expression " directly or indirectly " but in cl. (a)(ii) which dealt with transfer of assets by the assessee to his minor child the expression " directly or indirectly " is not there. The Tribunal took notice of the fact that the Legislature could not have been unaware of the implications of the expression " directly or indirectly ", b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... brothers. On the same day, each brother made a gift of Rs. 50,000 in favour of his nephew and/or niece with the result that each assessee's minor child or children benefited to the extent of Rs. 50,000. All these gifts having been effected on the same day were part and parcel of the same transaction and even though the expression " directly or indirectly " was not used at the relevant time still they were part and parcel of the same transaction and the taxing authorities were right in including the sum of Rs. 50,000 in computing the net wealth of each one of the assessees. He submitted that such was the real intention of the original provision is clear as, later on, by the W.T. (Amend.) Act of 1964, the provisions of s. 4(1)(a)(ii) were ame ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear 1963-64, with which we are concerned, s. 4(1)(a)(i) and (ii) read as under : " 4. (1) In computing the net wealth of an individual, there shall be included, as belonging to him-- (a) the value of assets which on the valuation date are held-- (i) by his wife to whom such assets have been transferred by the individual, directly or indirectly, otherwise than for adequate consideration or in connection with an agreement to live separately, or (ii) by a minor child not being a married daughter to whom such assets have been transferred by the individual otherwise than for adequate consideration." The short question that we have to consider in this case is whether on a proper interpretation of cl. (a)(ii) above, in computing the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re includible even though they were transferred either directly or indirectly, but so far as a minor child was concerned, they were includible only if they were transferred by the assessee, which means directly transferred. When an uncle has made a gift of Rs. 50,000 in favour of his minor niece or nephew it cannot be said that the father has transferred to his own minor child or children Rs. 50,000 even though a number of gifts as parts of the same transaction might have taken place on the same day. This provision of s. 4(1)(a)(ii) is evidenced from the fact that later on Parliament considered it necessary to amend the provisions of s. 4(1)(a)(ii) by the W.T. (Amend.) Act, 1964. By that amendment even in cl. (a)(ii) the expression " direct ..... X X X X Extracts X X X X X X X X Extracts X X X X
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