9911796707
|
Home
Issues:
1. Interpretation of exemption under section 5(1)(v) of the Gift-tax Act for an initial gift made to a trust. Detailed Analysis: The case involved an application by the Revenue under section 26(3) of the Gift-tax Act seeking a direction for the Tribunal to refer a question regarding the exemption of a gift worth Rs. 2,50,000 made by the assessee to a trust under section 5(1)(v) of the Act. The assessee contended that the gift should be exempt, while the Revenue argued that exemption should not apply to an initial gift made to a trust. The AAC accepted the assessee's contention, but the Revenue appealed to the Tribunal, challenging the grant of exemption. The Tribunal, citing precedents, held that even an initial gift to a trust would be entitled to exemption under section 5(1)(v), a decision disputed by the Revenue. The main contention of the Revenue was that exemption under section 5(1)(v) should only apply to gifts made to an already established institution or fund for a charitable purpose. The Revenue argued that since the trust was established simultaneously with the gift, the exemption should not be granted. However, the court disagreed with this argument, stating that if a gift is made to a trust created at the same time as the gift, the trust should be deemed to have been established for the purpose of accepting the gift. The court analyzed the settlement deed and concluded that the trust was created before the gift was made, even though both actions occurred simultaneously under the same document. The court drew support from the Bombay High Court's decision in CGT v. Yogendra N. Mafatlal, where it was held that the initial gift to a trust should be entitled to exemption under section 5(1)(v) in the same manner as subsequent gifts. The court emphasized that the legislative intent was clear in allowing exemption for all gifts to the fund, including the initial gift that formed the fund. A similar decision was also referenced from CGT v. Lachman Dass Oswal, where the court upheld that the initial gift to a trust should be exempted like subsequent gifts. The court endorsed the Tribunal's view, stating that it aligned with the provisions of section 5(1)(v) of the Act. Consequently, the court dismissed the tax case petition, ruling against directing a reference and decided that there would be no order as to costs.
|
