1984 (7) TMI 142 - AT - Income Tax

Deemed Gift, Educational Institutions, Income Tax Return, Own Capital, Stamp Duty, Wealth Tax Return

Summary

Issues:
1. Dispute over deemed gift made by deceased to relatives.
2. Ownership of properties in question at the time of sale.
3. Applicability of section 4(1)(a) of the Gift-tax Act.
4. Liability of legal heirs for gift-tax assessment.
5. Legal implications of Tribunal's decision on ownership.
6. Interpretation of sections 51(2) and 52(2) of the Act.
7. Market value determination for tax assessment.

Detailed Analysis:
The judgment deals with nine appeals consolidated due to a common question regarding a deemed gift made by the deceased to relatives. The deceased initially sold properties to certain individuals and later sold portions to relatives and educational institutions. The Assessing Officer initiated proceedings for capital gains and gift-tax, assessing a deemed gift amount. The AAC, relying on a Tribunal decision, concluded the deceased was not the owner of the properties, thus canceling the assessments. The revenue appealed, arguing against the AAC's decision (Para 2-3).

The Tribunal found the AAC's reliance on the Tribunal decision misconceived. While the deceased may not have been the property owner, he was considered the transferor based on his conduct and tax assessments. The Tribunal highlighted that the deceased's treatment of the properties indicated ownership, justifying gift-tax liability. The Tribunal also discussed the applicability of sections 51(2) and 52(2) of the Act in determining tax liability (Para 5-6).

Regarding tax liability, the Tribunal referenced Supreme Court decisions to affirm that a transfer below market value could result in a gift-tax liability. The Tribunal concluded that the deceased was liable for tax on the deemed gift under section 4(1)(a) of the Gift-tax Act. The Tribunal found the AAC's orders legally flawed and unsustainable (Para 7).

Further, the Tribunal noted discrepancies in the valuation of the properties, requiring a reassessment of the market value for tax purposes. The matter was remanded to the AAC for a fresh decision based on the correct market value determination. The appeals were treated as allowed for statistical purposes (Para 8-9).