9911796707
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Issues Involved:
1. Jurisdiction of the Gift-tax Officer, Palghat, to make the assessment. 2. Validity of the gift of properties to their brother under the gift deed dated June 8, 1961. 3. Assessment of the assessees in the status of an association of persons. Issue-wise Detailed Analysis: 1. Jurisdiction of the Gift-tax Officer, Palghat, to Make the Assessment: The first issue concerns whether the Gift-tax Officer, Palghat, had the jurisdiction to make the assessment. According to Section 7 of the Gift-tax Act, the jurisdiction is determined based on the residence of the assessee. The Explanation to Section 7 specifies that for individuals with no income assessable under the Income-tax Act, the relevant officer is the one in the area where the person resides. The assessment year in question is 1962-63, and there is no contention that the applicant or her sister had assessable income for that year. The applicant was described as a resident of Palghat District in the gift deed dated June 8, 1961, and her address in her letter dated February 29, 1964, also indicated Palghat. The power to transfer cases is vested in the Commissioner of Gift-tax under Section 7A. The objection to jurisdiction was raised for the first time before the Appellate Tribunal and was dismissed. The court concluded that this question should not have been referred to them as there was no case that either applicant was not a resident within the Palghat area during the assessment year. 2. Validity of the Gift of Properties to Their Brother Under the Gift Deed Dated June 8, 1961: The second issue examines whether the gift of properties to their brother was valid. The court found no substance in the argument that the mother was the real donor. Under the last will of the applicant's mother, the properties devolved on the applicant and her sister, who then transferred these properties to their brother via a deed of gift. The donee received the properties from his sisters, not directly from their mother. The contention that the gift was made in obedience to their mother's last wish, and therefore the mother was the donor, was deemed unstatable. 3. Assessment of the Assessees in the Status of an Association of Persons: The third issue is whether the assessees were correctly assessed as an association of persons. The applicant's counsel argued that their interests in the gifted properties were separate and distinct, and merely making a joint gift did not constitute them as an association of persons. The revenue's counsel contended that the gift-tax charge was on the transaction of the gift, and since the applicant and her sister joined in that transaction, it should be chargeable as one made by an association of individuals. The term "association of individuals" is not defined in the Gift-tax Act, but the court referred to precedents under the Income-tax Act, which require a common purpose or action to form such an association. The court concluded that for a conveyance to be by an association of individuals, the title must belong to that association. If individuals make a joint gift of properties they own separately, it does not make them an association of individuals. The court held that the assessment as an association of individuals was not warranted under the law. Conclusion: The court declined to answer questions 1 and 2 and answered question 3 in the negative, ruling against the Commissioner of Gift-tax. The parties were ordered to bear their own costs. A copy of the judgment was to be forwarded to the Income-tax Appellate Tribunal as required by Section 26(6) of the Gift-tax Act, 1958.
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