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Issues:
1. Whether the offerings received by the Swamigal and given to the trust constitute a gift? 2. Whether the creation of a trust and giving money to it amounts to alienation and gift? Analysis: 1. The Swamigal received offerings from devotees, which were then given to a trust created by him for the maintenance of the Mutt and religious activities. The Revenue contended that this constituted a gift, but the Tribunal disagreed. The Tribunal cited the Privy Council's decision, stating that offerings made to a holy person for religious purposes do not require acceptance to complete the gift. The Tribunal concluded that the application of money by the Swamigal for religious purposes did not amount to a gift as there was no transfer of money to the trust. 2. The Revenue argued that the creation of a trust and giving money to it resulted in alienation and gift as per the Gift-tax Act. However, the assessee's counsel contended that the trust was formed to spend amounts for the Mutt's maintenance and religious activities, and the money received was dedicated for religious purposes. Citing the Supreme Court's decision, it was highlighted that offerings to the head of a Mutt are meant for religious purposes connected with the institution. The court emphasized that the application of money for the trust's objectives did not transfer ownership, as the funds were already burdened with the obligation to be used for religious purposes. 3. Referring to a Gujarat High Court decision, it was noted that the creation of the trust by the Swamigal was a vesting declaration, not a transfer of ownership. The court agreed with the Gujarat High Court's interpretation that such trust deeds do not involve transfer of property to oneself. Therefore, the trust created by the Swamigal was seen as a vesting declaration, not constituting a gift to the trust. The court ruled in favor of the assessee, concluding that no gift tax was applicable in this case.
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