TMI Blog1997 (2) TMI 69X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal has referred to this court the following question in T.C. Nos. 409 and 410 of 1984 in respect of the same assessment years with reference to the respondent-assessee, S. Rajaramalingam : "Whether, on the facts and in the circumstances of the case, no portion of the gifts made by the assessee during the years is taxable and that the assessee is entitled to exemption under section 5(1)(ii)(a) of the Gift-tax Act for the assessment years 1975-76 and 1976-77?" In T. C. Nos. 361 and 362 of 1984, the respondent assessee remains unrepresented and in T. C. Nos. 409 and 410 of 1984, the respondent-assessee is represented by counsel who vehemently made his submissions elaborately in support of the Tribunal's order. It is clear that in both the sets of tax case references, the common issue involved is whether exemption under section 5(1)(ii)(a) of the Act could be granted to the assessees. In T. C. Nos. 361 and 362 of 1984, while the Gift-tax Officer rejected the exemption claimed by the assessee, the first appellate authority negatived the exemption for the assessment year 1975-76, and granted exemption for the assessment year 1976-77. There were, therefore, two appeals to the Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 5(1)(ii)(a) of the Act. The said Tribunal's order in relation to the assessment year 1975-76 was in G. T. A. No. 55 (Mds) of 1977-78 and G. T. A. No. 58 (Mds) of 1977-78 dated April 26, 1978. It is that order, which was the subject-matter of reference to this court in the above referred to T. C. No. 1248 of 1979 (CGT V. S. Raja Ramalingam [1997] 227 ITR 622) and in the above referred to order dated April 17, 1996, in T. C. No. 1248 of 1979 the facts were shortly as follows : There were three gifts by the same donor assessee, viz., (1) to his father, to be given to his brother, (2) to the father for his own benefit and (3) to the father to be given to his mother, and in each case, the draft was received and encashed in India and credited to the respective accounts in the books of the father. Admittedly, the assessee, Rajaramalingam, was not ordinarily resident in India. As per section 5(1)(ii)(a) of the Act, gift-tax shall not be charged under the Act in respect of gifts made by any person, "of movable property situate outside" the territories to which the Act extends, "unless the person being an individual, is a citizen of India and is ordinarily resident in the said territo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... likewise in this case also in favour of the Revenue. Further, the said learned counsel also points out that the gifts are complete only when they are accepted by the donees, and till then, it cannot be said that the "transfer" spoken to in section 2(xii) of the Act which defines the term "gift", has been "made". So, according to the said learned counsel, if the gifts are to be exempted from tax under section 5(1)(ii)(a) of the Act, it has only to be seen where actually the movable property in question is situate at the time when the gift is so complete. The said learned counsel submits that though the requirement of acceptance of gift by the donee is spoken to only in section 122 of the Transfer of Property Act (which defines the term "gift" thereunder) and not section 2(xii) of the Act, the said acceptance has necessarily to be implied in the definition of the term "gift" under the Act. The said learned counsel also relies on CGT v. R. Kesavan Nair [1974] 96 ITR 365 (Ker) and the definition of the term "donee" under section 2(viii) as a "person who acquires any property under a gift". (emphasis supplied). On the other hand, learned counsel for the assessee relies on Vadulla Ven ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sident in the said territories, or (b) not being an individual, is resident in the said territories during the previous year in which the gift is made;" Admittedly, the assessee is an individual but does not fall under clause (ii)(a) above and the properties gifted are movable properties. So, the only question to be decided is where actually those movable properties were situate at the time when the gifts were made. In this regard, it is also clear to us that the movable properties gifted are the above referred to drafts in question sent by the assessee-son in the United States of America to his father in India. From the facts in the present case, it appears that the gifts were made by the son to the father, in the above manner for being handed over to the respective donees. In such a situation, we have only to see where actually those drafts (subject-matter of gifts) were situate at the time when the gifts were accepted by the said donees. Even in a case where any of the gifts is directly in favour of the father himself, there also, it has only to be seen where actually the draft was, at the time when the father accepted the gift. Looking at it from this angle, it is clear to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lending is only an unilateral transaction and not bilateral transaction. For the above reasons, we agree with the view expressed in CGT v. R. Kesavan Nair [1974] 96 ITR 365 (Ker) and are unable to agree with the halting or casual observation of the Andhra Pradesh High Court in Vadulla Venkata Rao v. CGT [1972] 85 ITR 249 that "the acceptance of gift by a donee or some one on his behalf does not appear to be a specific requisite condition for a gift under the Act". (emphasis supplied). Learned counsel for the assessee also argues that if the intention of the Legislature was to give the same meaning of "gift" as found in section 122 of the Transfer of Property Act, in the Gift-tax Act also, then it would have incorporated the very definition of the term "gift" found in the abovesaid section 122 in the definition under section 2(xii) of the Act. But, in our view, there is no merit in this argument also. If the definition found in the abovesaid section 122 is incorporated in section 2(xii) of the Act, it may give rise to other problems. For example, the abovesaid section 122 does not apply to Muslims even as per section 129 of the Transfer of Property Act. Muslims are governed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n is only on the assessee and the said burden has not been discharged at all by him. So, it only follows that acceptance had taken place only after the drafts came down to India by post and they were received by the assessee's father. So, it is clear that the subject-matter of the gift was only in India at the time the gift is complete, that is, at the time when the "transfer" (pursuant to the proposed gift) was "made", i.e., when the transfer of property in the subject-matter of the gift has taken place. The above referred to Union of India v. Mohd. Nazim, AIR 1980 SC 431, has no application to the present facts. There, from India, value payable article was sent to Pakistan by post and considering the relevant provisions of the Post Office Act of India, the Supreme Court held that on the facts before it, the postal authority in India cannot be taken as an agent of the sender of the said article. This proposition of law laid down can have no application to the present facts where from outside India, the post has been sent to India. In the present case, we do not know what was the law in the United States of America regarding the postal authority there, to whom the above referred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ual verdict or conclusion in each case depended on the application of the same principles to the facts in each of the said cases. To illustrate, Shri Jagdish Mills Ltd. v. CIT [1959] 37 ITR 114 (SC) is a case of the Government of the then existing British India making payment by cheque, of a sum, by post from Delhi to the then existing princely State of Baroda. The sum involved was given by the said Government during the course of business. In that context it was held thus : ". . . the parties must have intended that the cheques should be sent by post which is the usual and normal agency for transmission of such articles. If that were so, there was imported by necessary implication an implied request by the appellant to send the cheques by post from Delhi thus constituting the post office its agent for the purposes of receiving those payments." (emphasis supplied) Likewise Prima Realty v. Union of India [1997] 223 ITR 655 (SC) was a case where the Central Government paid by cheque the sum due, pursuant to an order under section 269UD(1) of the Income-tax Act, 1961, passed by the appropriate authority, acquiring the property in question, and the question was whether the payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not involving any serious application of mind to come to a decision as to whether the act could be undertaken. But, the case of acceptance of a gift as agent involves serious application of mind to come to a decision as to whether acceptance of the gift should be given or not. In this latter case of acceptance of gift, a donee has got the option even to reject the gift either because it is onerous or even otherwise. Such exercise of option cannot be normally expected from a post office, when it acts as the agent of the donee. Therefore, in such a case, the agency on behalf of the donee (payee) cannot be so readily inferred unless the request by the payee is manifested expressly, or, at least clearly and unequivocally, by implication. But, in the present case, there is absolutely no material to make any such inference. Further, the transaction in the present case is also not in the course of any business. In the above context, the assessee has not discharged his burden in this regard in claiming exemption. Therefore, it has to be necessarily held that he cannot claim the exemption. The other argument of learned counsel for the assessee based on the term "voluntarily" used in secti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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