9911796707
TMI Blog1983 (2) TMI 117X X X X Extracts X X X X X X X X Extracts X X X X ..... , the land with the structure as contributed by the assessee towards her capital, was divided between her and her four sons. The land with structure admeasuring 1,589.58 sq. yds., was divided between the assessee and her two sons in equal shares and the land measuring 1422.55 sq. yds., alongwith structure was divided between the remaining two sons of the assessee in equal shares. Thus, on dissolution, the assessee simply acquired the land admeasuring 530 sq. yds., out of the total land measuring 3012.12 sp. yds., which absolutely belonged to the assessee before the constitution of the firm. The Gift-tax Officer, for short, the GTO, called upon the assessee to explain why it should not be held that he made a gift of the plot of land and structure to her four sons. The assessee contended that there was no transfer by one person to another, as the firm was not a legal entity and thus, there was no gift. The GTO felt convinced with the explanation of the assessee and he dropped the proceedings vide order dt. 25th January 1977. Then, the CGT exercising jurisdiction u/s. 24, held that the order of the GTO dropping the gift-tax proceeding on 25th January, 1977, was erroneous and prejudici ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... med that there is a transfer of the plot of land, still there is no gift, as the assessee contributed the plot of land to the firm for consideration. He says that onus is on the revenue to prove that there was transfer of property amounting to gift. Lastly, Shri Ranka argues that the GTO held the gift having been made at the inception of the constituion of the firm when the plot of land was valued at Rs. 94,000 instead of Rs. 2,51,000, which according to the GTO was the market value on the date of constitution of the firm. He says that there cannot be any gift within the meaning of s. 4(1)(D), simply because the plot of land of a greater value was valued for a smaller amount. 3. In para 3 of his order, the GTO observed as under: "Therefore, it was considered that the assessee caused this property to be vested in herself or other person jointly without adequate consideration and the other person made an appropriation from out of the said property." 4. Then in para 7 of his order, the GTO observed:" The Act of the assessee in converting the individual asset to that of the firm is clearly covered by the provision of s. 4 (1) of the GT Act". 5. From the above findings of the GT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd that on dissolution of the firm, the four sons appropriated the said property and that they would have appropriated any amount from the property so vested in them either to their own or to the advantage of other. so, the conversion of the absolute land into the joint ownership at the time of constitution of the firm and appropriation of the land by the four sons of the assessee at the time of dissolution of the firm are fully established in this case and, therefore, there is a deemed gift u/s. 4 (1)(d). the phrase "deemed gift" sometimes refers to a position which otherwise appears to be impossible. in ordinary sense, there may not be a gift, because the assessee continued to be the owner of the land alongwith her sons, but since cl. (xii) of s. 2 refers to deemed gift also, Shri Ranka cannot successfully argue that there being no transfer of any person to another under any of the modes specified in cl. (xxiv) there was no gift. Though the arguments continued on this point at a great deal of length, but we were very firm from the very beginning that the argument of Shri Ranka in this behalf was misplaced, inasmuch as, he lost sight of the fact that cl. (xii) of s. 2 does not onl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ws did not come into force suddenly and the people came to know about such laws quite early. Except the execution of the partnership deed and making the application for obtaining licence, nothing else was done by the partners. Whereas the assessee contributed a far more capital, her four sons contributed only a paltry amount of Rs. 4,900 and odd and on dissolution of the firm, they acquired substantial land and structures. Shri Ranka says that simply because on dissolution of a firm, some of the partners acquired shares disproportionate to their capital contribution, it cannot be said that no gift was made. When this factor is read cumulatively with other factors, we are constrained to observe that partnership deed was nothing but a simulate arrangement. Thus, there was no consideration for converting the absolute property into joint ownership. The absolute property of the assessee having been converted into joint ownership of the assessee and her sons and the four sons of the assessee having appropriated the land under the garb of dissolution of the firm, we hold that clearly there was a deemed gift u/s. 4(1)(d). 7. We also do not agree with Shri Ranka that according to the GTO ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
