1985 (1) TMI 113 - AT - Income Tax

Summary

Issues:
1. Whether the deposits made by the assessee in the name of his wife constitute gifts for the purpose of gift tax assessment.
2. Whether the Wealth tax assessment and treatment of deposits by the WTO are relevant to the issue of gift tax assessment.

Analysis:
1. The appeals concern the assessment years 1976-77 and 1977-78, where the assessee, a retired government servant, made deposits in his wife's name. The GTO treated these deposits as gifts from the assessee to his wife, subjecting them to gift tax after allowing an exemption. The first appellate authority upheld this treatment, considering the deposits as gifts despite the assessee's claim of making them for convenience. The Department argued that the wife's acceptance of the deposits as gifts and subsequent joint deposits contradicted the convenience theory. However, the assessee contended that the deposits were shown in his Wealth tax returns as his own wealth standing in his wife's name, indicating no intention of gifting. The Tribunal held that the GTO's treatment of the deposits as gifts was unjustified based on the assessee's consistent treatment of the deposits as his own wealth in the Wealth tax assessments, concluding that the deposits were not gifts.

2. The Tribunal considered the Wealth tax assessments for the relevant years, where the assessee declared the deposits in his wife's name as his own wealth, which was accepted by the Settlement Commission and the WTO. The assessee's counsel argued that this treatment in Wealth tax assessments contradicted the notion of gifting, as the deposits were consistently shown as the assessee's wealth. The Tribunal emphasized that the GTO's attempt to tax the same deposits as gifts after they were assessed as the assessee's wealth in the Wealth tax assessments was unjustified. The Tribunal concluded that the deposits were not gifts based on their treatment in the Wealth tax assessments, allowing the appeals.

In conclusion, the Tribunal ruled in favor of the assessee, holding that the deposits made in the name of the assessee's wife were not gifts, as consistently shown in the Wealth tax assessments. The Tribunal found the GTO's treatment of the deposits as gifts unjustified, considering the assessee's consistent declaration of the deposits as his own wealth. Consequently, the appeals were allowed, overturning the previous orders subjecting the deposits to gift tax.