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Issues:
1. Interpretation of deed of settlement and rectification deed. 2. Assessment of gift tax for the assessment years 1970-71 and 1974-75. 3. Valuation of the gifted property using rental method versus land and building method. Analysis: Issue 1: Interpretation of deed of settlement and rectification deed The case involved the interpretation of a deed of settlement executed by the assessee transferring a property to trustees. The Gift Tax Officer (GTO) assessed the income from the property in the hands of the settlor, based on a clause in the settlement deed. The assessee contended that a subsequent rectification deed should be read along with the original settlement deed. The Appellate Tribunal held that the settlement deed constituted a complete transfer, rejecting the argument that the rectification deed canceled the original settlement. Citing legal precedents, the Tribunal emphasized that a valid trust, once created, is irrevocable by subsequent acts of the settlor. Issue 2: Assessment of gift tax The Tribunal determined that the transfer of property by the assessee in the settlement deed was a complete transfer for gift tax purposes. It directed the removal of the term 'protective' from the assessment order for the assessment year 1970-71, converting it into a regular assessment. Consequently, the assessment for the year 1974-75 was deemed infructuous and annulled based on the findings regarding the completeness of the transfer in the settlement deed. Issue 3: Valuation of the gifted property Regarding the valuation of the gifted property, the assessee had returned the value using the rental method, supported by an approved valuer's report. The GTO, however, valued the property higher using the land and building method. The Tribunal found that the rental method was appropriate, considering that the property was mostly tenanted, with a portion occupied by the assessee. Relying on Calcutta High Court decisions, the Tribunal accepted the value returned by the assessee as fair and reasonable, directing its full acceptance. In conclusion, the appeals were allowed based on the Tribunal's findings on the completeness of the property transfer, conversion of the assessment for 1970-71 into a regular assessment, and acceptance of the valuation of the gifted property using the rental method.
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