9911796707
TMI Blog2003 (4) TMI 75X X X X Extracts X X X X X X X X Extracts X X X X ..... as an amount of Rs. 4,000 deposited by the housing society with the Small Causes Court, Bombay, in Civil Suit No. 531/5728 of 1965 by the housing society. The co-operative housing society had entered into a composite agreement with the assessee and Smt. Giraben on December 18, 1968, whereunder the reversionary rights of the assessee in the land which was leased to the housing society were purchased by the society for Rs. 20.55 lakhs from the assessee and the assessee was to withdraw two suits filed by it against the society. In. that agreement, by clause (8), it was agreed that the society will waive the aforesaid two amounts which were payable by Smt. Giraben who was the sister of one of the directors of the assessee-company, to the society. The Gift-tax Officer found that the agreement dated December 18, 1968, was a composite agreement dealing with several disputes and it was provided therein that even if the sale of reversionary rights did not take place, it would not vitiate the other agreements contained therein. The Gift-tax Officer noted that, from clause (8) of the agreement, it was clear that Smt. Giraben was discharged fully from the liabilities towards the society. Whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Sarabhai, who was not at all a party to the original lease...". It was held that the assessee-company had surrendered its actionable claim vis-a-vis Malabar Co-operative Housing Society to provide monetary benefit to Ms. Giraben Sarabhai who was the sister of the main director of the assessee-company. The appellate authority found no infirmity in the view taken by the Gift-tax Officer and upheld his order. The Tribunal, in the appeal by the assessee, held that the assessee-company was not a person responsible for the release or discharge within the meaning of clause (c) of section 4 of the Act, though the assessee had waived its claim of Rs. 1,17,500 in favour of Smt. Giraben Sarabhai resulting in her release or discharge from her obligation to pay the said amount to the society. It was further held, assl1ming that the assessee-company was a "person responsible" for the said release or discharge, the same was made by the society by way of compromise of its dispute concerning the property of the assessee-company and therefore, the release or discharge was not without consideration in money or money's worth. It was observed that, as per the case of the Revenue itself, the company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the society, there was no finding to the effect that the release was not bona fide. In fact, the Gift-tax Officer had found that the composite agreement was for valid consideration and the society had released the debt of Giraben because of the consideration emanating from the assessee under the composite agreement. Learned counsel, in support of his contentions, relied upon the following decisions: (a) The decision of the Bombay High Court in Keshub Mahindra v. CGT [1968] 70 ITR 1 was cited for the proposition that, in construing commercial contracts, the tax authorities and the Tribunal must have regard to normal business considerations and look at the substance of the commercial transactions rather than the particular form they assume in a given case. They must not assume that every large transaction is a good potential source of revenue and then proceed to determine how much tax can be gathered from it, otherwise they are bound to fall into error and also make business impossible. (b) (i) The decision of the Gujarat High Court in CGT v. Smt. Ansuya Sarabhai [1982] 133 ITR 108 was cited to point out that, in the context of the provisions of section 4(1)(c) of the said Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the facts, it was found that there was no material on record to show that the agreement suffered from lack of bona fides or was not genuine. The provision of section 4(c), which falls for our consideration, reads as under: "4. Gifts to include certain transfers.--For the purposes of this Act,--... (c) where there is a release, discharge, surrender, forfeiture or abandonment of any debt, contract or other actionable claim or of any interest in property by any person, the value of the release, discharge, surrender, forfeiture or abandonment, to the extent to which it has not been found to the satisfaction of the Gift-tax 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;..." It will be noticed from the said provision of section 4(c) that, the extent to which the release is not found to have been made bona fide, its value shall be deemed to be a gift made by the person responsible for the release. The provision envisages the release, discharge, surrender, etc., by "any person". If such release, discharge, surrender, etc., is bona fide, there would arise no question of any de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons". Under this agreement, the society agreed to purchase the reversionary rights, title and interest of the company in the premises including the land and building in which Giraben was having two flats and a garage. There were litigations pending in which the assessee-company had claimed arrears of rent from the society. These suits were agreed to be withdrawn by the assessee. A sum of Rs. 20.55 lakhs was agreed to be paid by the society for purchasing the reversionary rights. The entire exercise between the different parties to the agreement was made in order to put an end to all their disputes and differences. Nowhere in the agreement was it stated that the amount payable by Giraben to the society was to be deducted from any amount agreed to be paid by the society to the assessee for purchasing the reversionary rights. It is also nowhere mentioned in the agreement that the assessee-company was entitled to receive any such amount from Giraben or that it had asked the society to waive such amount. Even if the society had waived its dues from Smt. Giraben in view of the composite nature of the agreement which required the assessee-company to withdraw its suits, it cannot be said t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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