1988 (9) TMI 67 - AT - Income Tax

Summary

Issues:
1. Whether "Gift" includes a deemed gift for purposes of section 5(1)(v).
2. Whether the gift of certain immovable properties to Sarabhai Foundation, Ahmedabad is exempted from gift-tax within the meaning of section 5(1)(v).

Analysis:
1. The first issue in the appeal concerned whether a "deemed gift" falls under the definition of "Gift" for exemption under section 5(1)(v). The Tribunal examined the provisions of section 2(xii) defining "Gift" and concluded that a "deemed gift" is included in the definition. The Tribunal held that as long as the gift is made to an institution established for charitable purposes, it qualifies for exemption under section 5(1)(v), subject to meeting other conditions of the subsection.

2. The second issue revolved around the exemption of the gift of immovable properties to Sarabhai Foundation under section 5(1)(v). The GTO initially held that the transaction was a sale, not a gift, and considered it a "deemed gift" under section 4(1)(a) due to inadequate consideration. The GTO also argued that Sarabhai Foundation did not enjoy the benefit of section 80G during the relevant period. However, the CGT (Appeals) found that Sarabhai Foundation had indeed enjoyed exemption under section 11 of the Income-tax Act for the relevant assessment year. The Tribunal upheld the CGT (Appeals) decision, citing a judgment of the Gujarat High Court confirming the exemption under section 11 for Sarabhai Foundation. The Tribunal emphasized that the lack of a certificate under section 80G for the specific period did not justify denying the exemption under section 5(1)(v) to the donor. Consequently, the Tribunal confirmed the findings of the CGT (Appeals) on the second issue.

3. The Tribunal also addressed a consequential appeal related to a rectification order passed by the GTO under section 34 of the Gift Tax Act. Since the levy of gift tax had been set aside in the main appeal, the Tribunal confirmed the decision of the CGT (Appeals) canceling the rectification order. Ultimately, both appeals were dismissed by the Tribunal.