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TMI Blog2018 (12) TMI 645X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal, for the Tribunal having not decided the crucial issue whether the transaction resulted in a gift or not under the provisions of the Gift Tax Act, 1958 ('GT Act', for short). 2. We would first consider the Gift Tax Appeal. Questions of law arising from the order of the Tribunal are re-framed as follows:- (1) Whether on the proprietorship being converted into a partnership firm, the shares allotted to the sons of the appellant/assessee could be treated as a gift assessable under the GT Act and the value of such shares, allotted to the children, assessed under Section 4(1)(c) of the GT Act? (2) Whether on the assessee bringing the land and property of a proprietorship firm into a partnership firm, there could be a gift ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 4(1)(a). The assessee went in appeal before the Commissioner, which appeal was allowed by Annexure-B. A further appeal was taken by the Revenue to the Tribunal, which stood rejected by Annexure-C. Reference by the Revenue was disposed of by this Court as per Annexure-D judgment. 5. A reading of Annexure-D would indicate that the Department had, in the Reference, only canvassed the question whether there was a gift of the building being used by M/s.Cochin Tourist Home to run a hotel, when the assessee converted her proprietary concerns carrying on two businesses into a partnership firm. The Reference was also disposed of remitting the matter to the Appellate Tribunal for recording a clear finding, after taking into consideration the riv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... despair the manner in which the Tribunal has dealt with the appeal itself, in a haphazard manner. 7. The Tribunal in Annexure-F order finds that there was a Miscellaneous Application filed by the assessee against Annexure-E order, pointing out that the principal question as to whether there was any gift, even when the land with the building became the asset of the firm, was not answered. The Tribunal then observes that by order dated 28.12.2000, the earlier order of the Tribunal dated 06.04.1990 (Annexure-C) was recalled. However, immediately thereafter the operative portion of the order dated 28.12.2000 is extracted which speaks of recall of the order dated 20.01.2000, which is Annexure-E order. Annexure-C order could not have been recall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irm. Again the question whether there was a gift was not considered. 9. The only question now arising is the second one i.e. as to whether there would be a gift and the difference between the market value and the book value could be assessed under Section 4(1)(a) of the GT Act. We find that the Tribunal has not answered the issue, but however, considering the fact that the appeals have been pending here for the last 17 years, we do not think that a remand would be appropriate, especially looking at the decision in Commissioner of Income Tax v. Jacobs (P) Ltd. rendered by a Division Bench of this Court reported in (1999) 237 ITR 433 (Kerala). 10. In Jacobs (P) Ltd., the assessee was a Company in which the public were not substantially inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a result of the transfer of the capital asset, it is impermissible to treat the amount credited in the capital asset in the books of account of the firm, as the consideration for the transfer for the purposes of section 4(1) of the Act." 11. In such circumstances, the question raised as (2) above would be answered in favour of the assessee. Though there was a transfer of the asset in favour of the firm, there cannot be any gift tax assessed on the differential value between the market value and book value. The value shown in the capital account of the firm is only the notional value and as long as the firm holds the property, there cannot be said to be any surrender of rights in the property by the assessee, in favour of the firm, since ..... X X X X Extracts X X X X X X X X Extracts X X X X
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