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TMI Blog1989 (4) TMI 28X X X X Extracts X X X X X X X X Extracts X X X X ..... the time when he had actually written off the entire debit balance standing in the account of his son and, consequently, the gifts should have to be severally assessed in the relevant years in which the amounts were spent by the assessee on his son ?" The assessee, an individual, was originally assessed to gift-tax on November 30, 1972, in respect of, certain lands settled on his grandson by means of a settlement deed. While examining the accounts for the assessment year 1972-73, the Gift-tax Officer noticed that a sum of Rs. 55,633.10 was forgone by the assessee in favour of his son and in the view that that amounted to a gift which had escaped assessment in the original assessment made earlier, action under section 16(1) of the Act was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection by the assessee were both dismissed and that is how the question of law referred to at the outset has come up before this court for its opinion. Learned counsel for the Revenue, referring to the entries in the books of accounts maintained by the assessee as found in the revised order of assessment passed by the Gift-tax Officer and relying upon the definition of "gift" in section 2(xii) and section 4(1)(c) of the Act, submitted that even according to the entries in the accounts maintained by the assessee, it was clearly established that the assessee had advanced loans to his son for the purpose of meeting his expenditure and had also carried forward these amounts which were ultimately written off on February 5, 1972 and that disclo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee had treated the amounts advanced to his son as loans and advances and had also, on February 5, 1972, after giving credit for a sum of Rs. 19,000 realised by the sale of a motor car belonging to his son, written off the balance of the amounts paid to his son. Under section 4(1)(c) of the Act, where there is a release or abandonment of any debt by any person, the value of the release or abandonment, to the extent to which it has not been found to the satisfaction of the Gift-tax Officer to have been made bona fide, shall be deemed to be a gift made by the person responsible for the release or abandonment. It, therefore, follows from section 4(1)(c) of the Act that having regard to the manner in which the advances had been treated by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of writing off of the amounts by the assessee established that even according to him, at least till that date, he had entertained hopes of recovering the amounts as loans, as per the accounts. The subsequent writing off of the amounts is of considerable significance in ascertaining when the gifts took place. The Tribunal purported to rely upon the letter of the assessee to the effect that there was no intention on his part to get back any portion of his drawings account in the name of his son and from this, it drew the inference that even at the time when the amounts were given by the assessee to his son and spent by him, gifts had taken place. What would be relevant is the contemporaneous treatment of the amounts advanced in the books of a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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