1994 (8) TMI 57 - AT - Income Tax

Summary

Issues:
- Validity of gifts made by the assessees and subsequent return filings to declare taxable gift at Rs. Nil.
- Interpretation of acceptance of gift by the donee as an essential condition for a valid gift under the Gift-tax Act.

Analysis:

The judgment by the Appellate Tribunal ITAT Amritsar involved two appeals by the Revenue concerning similar issues, which were disposed of together for convenience. In the first appeal, the assessee made gifts totaling Rs. 1.20 lacs to six donees, but due to family circumstances, the donees refused the gifts and returned the amounts. The assessee revised the return to declare taxable gift at Rs. Nil, but the GTO assessed the taxable gift at Rs. 1 lac, alleging the revision was an afterthought to avoid gift-tax. Similarly, in the second appeal, the assessee declared gifts of Rs. 1.40 lacs to seven donees, who also returned the gifted amounts due to family issues. The GTO assessed the taxable gift at Rs. 1.20 lacs, despite the revised return declaring Nil taxable gift. The Dy. CGT (Appeals) directed the GTO to accept the revised returns, stating that since the donees never accepted the gifts, the intended gifts never took place.

The Revenue appealed against the Dy. CGT (Appeals) orders, arguing that acceptance of gift by the donee is not an essential condition under the Gift-tax Act. They contended that the gifts became irreversible when credited into the donees' bank accounts, and the subsequent disclaimer by the donees was to evade gift-tax liability. The assessees' representative supported the Dy. CGT (Appeals) orders. The Tribunal analyzed the definitions of gift under the Gift-tax Act and the Transfer of Property Act, noting the requirement of acceptance by the donee in the latter but not explicitly in the former. Referring to case law, the Tribunal emphasized the importance of acceptance by the donee for a valid gift. In both appeals, the intended gifts were incomplete as the donees never accepted them, leading to the Tribunal upholding the Dy. CGT (Appeals) orders to accept the revised gift-tax returns declaring Nil taxable gift.

In conclusion, the Tribunal dismissed both appeals by the Revenue, affirming the Dy. CGT (Appeals) orders to accept the revised returns declaring Nil taxable gift, as the donees never accepted the gifts, rendering the intended gifts incomplete under the Gift-tax Act.