9911796707
TMI Blog1996 (2) TMI 173X X X X Extracts X X X X X X X X Extracts X X X X ..... Subject thereto to pay the residue of such dividends, interest and income to the said Neville Ness son of the Settlor for the period of his life; (c) After the death of the said Neville Ness Wadia upon trust to divide the Neville Ness Trust Fund No. 2 into as nearly as possible two equal moieties and to hold the same upon trust. " 3. The composition of the trust asset from the beginning to end was placed before us vide page 96 of the paper book. This is reproduced here as under : ---------------------------------------------------------- Sr. No. Date No. of shares Face value of shares Rs. ---------------------------------------------------------- 1. 13-1-1947 1001 & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plit into 2 moities - one for Diana & one for Nusli) Mr. Nusli's Moitey 87162 25 2144 shares sold between 9 & 10 11. 8-7-1985 83504 25 (Trust come to end by transfer) 3658 shares sold between 10 & 11) ---------------------------------------------------------- It was stipulated in the Trust Deed that on the demise of Sir Ness Wadia, the trust fund will be divided equally between Diana Claire Wadia and Nusli Wadia and the trust would come to an end. 4. Vide Release Deed dated 30-3-1957, Shri Neville Wadia (Releaser) extinguished his life interest in the said trust. 5. When son of the Settlor surrendered his life interest to his children, question arose whether it amounts to transfer of property by son to his chi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mount in question was held exigible to tax. 8. Smt. Shobha H. Jagtiani, learned counsel for the assessee, appeared before us. It was vehemently contended that the Bombay High Court in the case of Neville N. Wadia has held that execution of Release Deed did not amount to a transfer of assets by the assessee in favour of his minor children within the meaning of section 16(3)(a)(iii) of the I.T. Act, 1922. According to the learned counsel without transfer there cannot be any gift. Transfer is an essential ingredient for making a gift. Ordinarily transfer without consideration are known as gifts. In the instant case, assessee released his life interest. It was not a case of transfer. It was unilateral act. For transfer bilateral act is sine qua non. Our attention was invited on the decision of the Apex Court rendered in the case of Goli Eswariah v. CGT [1970] 76 ITR 675 (SC), wherein it was held that a transaction entered into by one person with another contemplated by clause (d) of sec. 2(xxiv) of the Gift-tax Act, 1958, cannot apply to an unilateral act. The act must be one to which two or more persons are parties. 9. It was stated that where a life interest holder releases by an u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (iii) (a) by succession, inheritance or devolution, or .......... (iv) the cost of acquisition of the asset shall be deemed to be the cost for which the previous owner of the property acquired it, as increased by the cost of any improvement of the assets incurred or borne by the previous owner or the assessee, as the case may be. 15. The CIT(A) was of the opinion that the capital asset became the property of the assessee under a gift. As such, it was held exigible to tax. The ingredients of gift can be enumerated as under : (1) there must be a transfer by one person to another; (2) the transfer should be of any existing movable or immovable property; (3) the transfer must be made voluntarily; and (4) the transfer must be made without consideration in money or money's worth. If all these essentials are fulfilled, then there will be a gift. Section 122 of the Transfer of Property Act, 1882 coining a definition of the expression "gift" reads as under---- " 122. 'Gift' is the transfer of certain existing movable or immovable property made voluntarily and without consideration by one person, called the donor, to another called the donee, and accepted by or on behalf of the donee. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, that the intention of the Legislature was to make a person liable for tax in respect of a transaction which he does not agree to, or even repudiates. If such an argument is accepted, the result will be that the donee can be made liable for tax even in cases where he repudiates the gift, for the taxable event arises on the donor executing the gift deed. 18. Sec. 4(1)(c) of the Gift-tax Act was referred by the ld D.R. in order to buttress the claim that even unilateral act can constitute a gift. This section speaks about a deeming provision and concerns a situation, inter alia, where there is a release of any interest in property by any person, the value of such release, etc., shall be deemed to be gift, to the extent not found bona fide to the satisfaction of the AO. 19. Under section 49 of the I.T. Act, 1961, the 'cost of acquisition' of capital asset which becomes the property of the assessee under a gift or will, etc., is deemed to be the cost for which the previous owner of the property acquired it, as increased by the cost of any improvement of the assets incurred by the previous owner or the assessee, as the case may be. However, it is possible that the previous owner of ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
