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2017 (11) TMI 917 - KERALA HIGH COURTTaxability of gifts - Transaction involved gift in terms of Section 4(1) (a) of the Gift Tax Act 1958 to attract any tax liability - Held that:- In the present case, over and above the additional capital contribution of ₹ 1,23,750/- the partner Suman Vijoo, who got more shares pursuant to the reduction of shares of the assessee, on reallocation, had admittedly provided collateral security to the financial transactions of the firm. It is also an undisputed fact that, the said partner by name Suman Vijoo had offered personal guarantee for various financial transactions of the firm and this being the position, it has to be taken together to assess the worth of the said person and the 'consideration' brought in for such reallocation of the shares. The mere arithmetical figures with reference to the total profit in the year in question, which came to be reduced and reduction in the probable portion of profit of the assessee as worked by the appellant/Revenue do not reflect the correct picture in this regard. The more important aspect with reference to the 'collateral security' furnished by the person concerned and the 'personal guarantee' offered by her have not been taken into consideration or dealt with by the Revenue. We are of the view that the first appellate authority as well as the Tribunal were perfectly justified in passing Annexures B and C orders; holding that there was no instance of 'gift' coming within the purview of section 4 (1) of the Act; in turn setting aside Annexure A order passed by the assessing authority. As it stands so, we are of the view that the substantial questions raised are not liable to be answered in favour of the Revenue and they stand answered in favour of the assessee. Appeal fails
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