9911796707
|
Home
Issues:
1. Whether the write-off of the loan was hit by section 4(1)(c) of the Gift-tax Act, 1958? Analysis: The case involved an assessee who, along with his brothers, advanced a sum of money to an individual between 1941 and 1946. The money was advanced from secret profits outside the books. A settlement was reached with the Central Board of Revenue in 1957, where each brother entered the amount in their books. However, in 1967-68, the debt was written off. The issue arose when the WTO questioned the write-off under section 4(1)(c) of the Gift-tax Act. The Tribunal found that the debt had become time-barred and was irrecoverable, and the write-off was not hit by the Act. The Tribunal considered the circumstances, including the fact that no legal steps could be taken for recovery due to the debt being time-barred. The Tribunal concluded that the write-off was bona fide, exempting it from gift-tax. The key question before the High Court was whether the write-off of the loan was hit by section 4(1)(c) of the Gift-tax Act. The Court noted that the debt had become time-barred in 1957, and the write-off was influenced by the inability to take legal steps for recovery. The Court found that the write-off was bona fide based on the totality of circumstances. The Court emphasized that under section 4(1)(c) of the Act, a debt is considered a gift only if the release, discharge, surrender, forfeiture, or abandonment is not bona fide. As the write-off in this case was deemed bona fide, it was exempt from gift-tax. The Court held in favor of the assessee, stating that even if the write-off could be considered abandonment, it would not be a gift under the Act due to its bona fide nature. In conclusion, the High Court answered the question in the negative, favoring the assessee and ruling against the department. The Court awarded costs to the assessee, assessing them at Rs. 200.
|
