1977 (7) TMI 46 - HC - Income Tax

Chargeable Profits, Computation Of Capital, Gratuity Reserve, Reserve For Doubtful Debts, Super Profits Tax

Summary

Issues Involved:
1. Determination of the date of the gift of plots Nos. 14 and 15.
2. Determination of the rights gifted in 1958.

Issue-wise Detailed Analysis:

1. Determination of the Date of the Gift:
The primary issue was whether the gift of plots Nos. 14 and 15 occurred in 1954 or on June 6, 1958. The assessee argued that the gift was completed in 1954 when the municipality agreed to convey the lands to Mrs. Francisca Ferreira. The revenue contended that the gift occurred only in 1958 when the conveyance documents were executed. The court examined the correspondence and actions taken in 1954 and concluded that the mere request to prepare conveyances in favor of Mrs. Francisca Ferreira did not constitute a transfer of property or a gift. The court emphasized that no interest or right in the plots was transferred to Mrs. Francisca Ferreira in 1954, as there was no written instrument of transfer as required by Section 130 of the Transfer of Property Act. The court also noted that the possession and rental income from the plots continued to be with the assessee until the conveyances were executed in 1958. Therefore, the court held that the gift of the plots arose on June 6, 1958, when the conveyance documents were executed.

2. Determination of the Rights Gifted in 1958:
The second issue was whether the gift in 1958 included all the rights in respect of the two plots Nos. 14 and 15. The court noted that by the deeds of conveyance dated June 6, 1958, the assessee transferred the right to have a conveyance executed in favor of Mrs. Francisca Ferreira, thereby making her the full legal owner of the plots. The court held that the gift included the right to possession, rents, and profits of the plots. The value of the gift was determined to be the market value of the plots on the date of the execution of the conveyances, i.e., June 6, 1958.

Conclusion:
The court concluded that the gift of the plots arose on June 6, 1958, when the conveyance documents were executed, and the gift included all the rights of ownership, such as possession, rents, and profits. The value of the gift was to be assessed based on the market value of the plots on the date of the execution of the conveyances. The assessee was ordered to pay the costs of the revenue.