1973 (10) TMI 13 - HC - Income Tax

Gift Tax Act, 1958 - Whether, on the facts and in the circumstances of the case, the provisional assessment for the assessment year 1960-61 is an assessment within the meaning of the second proviso to section 2(xx) of the Gift-tax Act, 1958 ?

Summary

Issues:
1. Interpretation of the term "assessment" under the Gift-tax Act, 1958 for the assessment year 1960-61.
2. Determination of the previous year for subsequent assessment years based on the assessment made for a specific year.
3. Validity of the order passed by the Gift-tax Officer as provisional or final.

Analysis:

The High Court of Gujarat addressed the issue of whether the provisional assessment for the assessment year 1960-61 constituted an assessment within the meaning of the second proviso to section 2(xx) of the Gift-tax Act, 1958. The case involved two gifts made by a deceased donor, which were initially assessed together for the assessment year 1961-62. The Appellate Assistant Commissioner directed the assessment based on the financial year, overturning the clubbing of the gifts. The revenue appealed this decision, arguing that the assessment was provisional due to discrepancies in the previous year determination. The Tribunal held that the assessment was provisional, leading to the reference to the High Court.

The Court analyzed the provisions of the Gift-tax Act, particularly section 3 (charging section) and section 2(xx) (definition of "previous year"). The second proviso to section 2(xx) stipulates that the previous year for subsequent assessment years remains the same unless varied with the consent of the Gift-tax Officer. The Court emphasized that the assessment order in question, dated March 26, 1965, treated the financial year 1959-60 as the previous year for the assessment year 1960-61. Despite an office note suggesting the assessment was provisional, the Court noted that the Gift-tax Act does not provide for provisional assessments. Therefore, the order was considered a final assessment.

The Court highlighted that once a previous year is determined for a specific assessment year, it remains fixed for subsequent years unless changed with the Officer's consent. Since the Gift-tax Officer treated the financial year as the previous year for 1960-61, this determination was final and binding for subsequent years. Consequently, the Court ruled in favor of the assessee, concluding that the assessment was not provisional but final under the Gift-tax Act. The Commissioner of Gift-tax was directed to pay the costs of the reference to the assessee.

In conclusion, the Court clarified the interpretation of "assessment" under the Gift-tax Act for the assessment year 1960-61, emphasizing the significance of the previous year determination and the finality of such assessments. The judgment provided a comprehensive analysis of the relevant legal provisions and upheld the assessee's position regarding the assessment's nature and validity.