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Assessment of deemed gift under the Gift Tax Act based on the release of life interest in a waqf property, determination of the bona fide nature of the release, application of Section 4(1)(c) of the Gift Tax Act, interpretation of the exception clause in the said section, reliance on the decision of the Hon'ble Bombay High Court, consideration of factors affecting the genuineness of the gift, and the need for further inquiry by the GTO. Analysis: The judgment involves a dispute regarding the assessment of a deemed gift under the Gift Tax Act, arising from the release of a life interest in a waqf property by the assessee. The assessee released his life interest to accelerate the interests of other beneficiaries, namely his daughter and sons. The Gift Tax Officer (GTO) deemed this release as a gift under Section 4(1)(c) of the Gift Tax Act, despite the assessee's valuation of the gift at a lower amount than assessed. The assessee challenged the assessment, and the ld. AAC of GT relied on a decision of the Bombay High Court to cancel the assessment, prompting the Revenue's appeal against this decision. The crux of the issue lies in the interpretation of Section 4(1)(c) of the Gift Tax Act, which deems certain actions, including the release of property interest, as gifts unless proven to be bona fide. The clause provides for an exception if the release is shown to be done for genuine reasons. The judgment emphasizes that the burden of proof lies on the assessee to establish the bona fide nature of the release to the satisfaction of the GTO. The AAC's decision was based on the assumption of bona fides without proper inquiry into this crucial aspect, contrary to the requirement of the section. The judgment highlights the significance of examining various factors to determine the genuineness of the gift, such as the financial status of the parties involved, tax implications, and the objective behind the release. It underscores the legislative intent behind the Gift Tax Act to prevent tax evasion through gifts. The GTO is directed to conduct a thorough inquiry into the bona fides of the release, considering the potential tax implications and the Select Committee's observations on the exception clause in Section 4(1)(c). The judgment emphasizes the need for a factual determination by the GTO regarding the nature of the gift before assessing its value, as per the provisions of the Act and relevant rules. In conclusion, the judgment sets aside the previous orders and instructs the GTO to reassess the situation after allowing the assessee to prove the bona fide nature of the release. The decision underscores the importance of factual assessment and adherence to legal provisions in determining the tax implications of deemed gifts under the Gift Tax Act.
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