TMI Blog2013 (1) TMI 608X X X X Extracts X X X X X X X X Extracts X X X X ..... er 1982 and 31st May 1986 is possible, on an interpretation of Section 4(1)(c) to answer this question either way, but unfortunately the High Court did not even notice this provision of the Act. Thus this case cannot be decided finally as the view of the High Court on the interpretation of Section 4(1)(c) is missing. Nor the view of the High Court on the applicability or otherwise of the principle laid down in McDowell & Co [1985 (4) TMI 64 - SUPREME COURT]. As far as the applicability of Escorts Farms is concerned [1996 (9) TMI 4 - SUPREME COURT] the question that arose for consideration in that case was the determination of the cost of acquisition of the original shares when bonus shares are subsequently issued. That is the second part of Section 4(1)(c) and that question would arise (if at all) only after a finding is given by the High Court on the first part of Section 4(1)(c) - remand the matter for de novo consideration by the High Court keeping in mind the provisions of Section 4(1)(c) of the Act as well as the orders passed in the case of the assessee for the Assessment Year 1982-83. - CIVIL APPEAL NO. 3914 & 3915 OF 2010 - - - Dated:- 22-1-2013 - D.K. Jain And ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the 6000 shares gifted to the transferee came back to the assessee. However, the 14,000 bonus shares allotted to the transferee while it was the holder of the equity shares of the company continued with the transferee. Assessment proceedings for AY 1982-83: 9. For the Assessment Year 1982-83, the Gift Tax Officer passed an assessment order on 17th February 1987 in respect of the assessee. He held that the revocable transaction entered into by the assessee was only for the purpose of reducing the tax liability. As such, it could not be accepted as a valid gift. For arriving at this conclusion, the assessing officer relied upon McDowell Co. v. Commercial Tax Officer, [1985] 154 ITR 148. Accordingly, the assessing officer, while holding the gift to be void, made the assessment on a protective basis. 10. Feeling aggrieved by the assessment order, the assessee preferred an appeal before the Commissioner of Gift Tax (Appeals) but found no success. The Commissioner of Gift Tax (Appeals), however, held that since the gift was void, a protective assessment could not be made. 11. The assessee then preferred a further appeal to the Tribunal and by its order dated 23rd August 1991 al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shares particularly because the shares have been received by it as a result of a revocable transfer; secondly, whether the bonus shares received by the transferee could be described as a benefit derived by the transferee from the transferred shares. 17. The assessing officer held that the transferee does not become the owner of the gifted shares until the transfer is an irrevocable transfer. Proceeding on this basis, it was held that the 14,000 bonus shares allotted to the transferee were a part and parcel of the gifted shares and the assessee only took back 6000 shares from the transferee pursuant to the revocable gift. Consequently, it was held that the assessee had surrendered his right to get back 14,000 bonus shares which were treated as a gift by the assessee to the transferee in view of the provisions of Section 4(1)(c) of the Act. The assessee was taxed accordingly. 18. Feeling aggrieved by the reassessment order, the assessee preferred an appeal to the Commissioner of Gift Tax (Appeals). By his order dated 8th September 1998 the Commissioner held that since there was no regular transfer of the bonus shares, the transferee could not claim any ownership of the shares. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent to which it has not been found to the satisfaction of the Assessing Officer to have been bona fide, shall be deemed to be a gift made by the person responsible for the release, discharge, surrender, forfeiture or abandonment; (d) to (e) xxx 24. A perusal of the impugned judgment and order facially indicates that there has been no consideration of the provisions of Section 4(1)(c) of the Act. From the rather elaborate narration of facts, it is quite clear that the assessee had made a valid revocable gift of 6000 equity shares in the company on 20th February 1982 to the transferee. This is a finding of fact conclusively determined by the High Court in the assessee s own case. 25. The only event that took place in the previous year relevant to the Assessment Year 1989-90 was the revocation of the gift by the assessee on 15th June 1988. Was this event enough for the Gift Tax Officer, in 1996, to re-open the assessment for the year 1989-90, while keeping in mind the fact that bonus shares were allotted to the transferee on 29th September 1982 and 31st May 1986? It is possible, on an interpretation of Section 4(1)(c) of the Act to answer this question either way, but unfor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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