TMI Blog1989 (11) TMI 82X X X X Extracts X X X X X X X X Extracts X X X X ..... . $ 2000--(Rs. 17,200) in September, 1977. 2. Sri S. Ananthakrishnan--U.S. $ 5500 (Rs. 47,000) 3. Sri S. Subramanian--Gift out of cheque from local account in India--Rs. 35,000. The Gift-tax Officer brought to tax the entire amount after allowing an exemption of Rs. 35,000 under section 5(1)(xii) of the G.T. Act. On appeal, the first appellate authority enhanced the exemption to Rs. 45,000. He negatived the contention of the assessee that the gifts made in favour of S/Sri Narayanan and Ananthakrishnan in foreign currency were pot taxable under the provisions of sec. 5(1)(ii) of the G.T. Act. The assessee is on further appeal before us. 2. We have heard rival submissions. The revenue relies on the Board's Circular No. 302 dated 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the Bombay High Court in the case of Raj Kumar Mills Ltd. The case before the Bombay High Court was an Income-tax case. The issue was whether the income arose in British India or in the native State. The issue depended upon the terms of contract between the, supplier and the purchaser. We are confronted not with the accrual or receipt of income but with a totally different situation namely, the situs of gift. With regard to the first two donees the assessee had purchased drafts in foreign currency, namely, U.S. Dollars. Thus the movable property was located outside the taxable territories. It was not case of gift by cheque but a case of gift through demand draft. Therefore, when the non-resident individual purchases draft in a foreign ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operty, is located in the foreign country. The decision to make the gifts was taken in the foreign country. Steps to give effect to the decision were also taken in the foreign country by purchasing a draft in favour of the donees. Therefore, it cannot be held that the gift was made in the taxable territories. The decisions rendered by the High Courts and the Higher Courts in the realm of income-tax cannot be made applicable to the concept of gift as the meaning and ingredients of income and gift are totally different. The G.T.O. denied exemption under section 5(1)(ii) on the ground that the assessee could not produce any evidence to prove that the bank drafts were sent by the donor at the request of the donees. The assessee's main grievance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowed by the assessing authorities for the educational needs of the assessee's sons was enough. In CGT v. Smt. Letitia S. Fernandez [1989] 79 CTR (Ker.) 16, their Lordships of the Kerala High Court dealing with sec. 5(1)(xii) held that the intention of the donor-assessee is very relevant and when intention of the donor in making the gift was for education of his children, the manner of utilisation of that amount, in whatever form or manner, will not in any way derogate from the purpose of the gift and entitlement to exemption. The education as envisaged in sec. 5(1)(xii) cannot be given a restricted meaning. Education is never ending process or as has been rightly contended it is an on-going process. The Legislature has not put any moneta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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