1981 (9) TMI 147 - AT - Wealth-tax

Summary

Issues Involved:

1. Inclusion of the value of donated shares in the net wealth of the assessee trust.
2. Completion of gift transfers before the relevant valuation date.
3. Applicability of the Transfer of Property Act and the Companies Act in determining the completion of the transfer.
4. Role of the Post Office as an agent in the transfer process.

Detailed Analysis:

1. Inclusion of the value of donated shares in the net wealth of the assessee trust:

The primary issue was whether the value of shares donated by the assessee trust to various charitable institutions before the valuation date of 31st March 1975 should be included in its net wealth. The WTO included Rs. 3,35,611 in the net wealth of the assessee, arguing that the delivery of shares before the valuation date was not proven and the gifts were incomplete as the change of name was not effected in the companies' share registers.

2. Completion of gift transfers before the relevant valuation date:

The assessee argued that the delivery of shares was completed by posting the share certificates with duly executed transfer deeds to the donees, making the Post Office the agent of the donees. The AAC accepted this submission, stating that the share certificates were posted on or before the valuation date, and thus, the gifts were completed. The AAC granted relief of Rs. 3,35,611 to the assessee.

3. Applicability of the Transfer of Property Act and the Companies Act in determining the completion of the transfer:

The Revenue contended that the provisions of ss. 122 and 123 of the Transfer of Property Act were applicable, not the GT Act. They argued that the shares remained the property of the assessee trust on the relevant valuation date as the change of name was not effected in the companies' share registers. The AAC, however, held that the transfer of shares was independent of their registration in the companies' books, citing the decision in Smt. Suraj Bai's case.

4. Role of the Post Office as an agent in the transfer process:

The Revenue argued that the Post Office could only be considered the agent of the donees if there was evidence that the donees requested the shares to be sent by post. The assessee failed to provide such evidence. The AAC, however, accepted the assessee's argument that the delivery to the Post Office amounted to delivery to the donees, based on the decision in Ogale Glass Works' case. The Tribunal held that for Georgina MacRobert Memorial Hospital, the shares were delivered and acknowledged on 26th March 1975, thus not includible in the net wealth. However, for the other three institutions, as there was no evidence of a request to send shares by post, the value of these shares was includible in the net wealth.

Conclusion:

The Tribunal concluded that the value of shares donated to Georgina MacRobert Memorial Hospital should not be included in the net wealth of the assessee. However, the value of shares donated to Dr. Graham's Home, Mary Culvert Holdsworth Memorial Hospital, and Royal Commonwealth Society should be included in the net wealth. The appeal was partly allowed, setting aside the AAC's order to the extent of shares donated to the three institutions and restoring the WTO's order for those shares.