9911796707
TMI Blog1990 (8) TMI 215X X X X Extracts X X X X X X X X Extracts X X X X ..... was outstanding as on 30-6-1968. But these persons had by several trust deeds transferred assets belonging to them to the trusts for the benefit of the creditor, viz., the assessee. Therefore, the schedule to the Balance Sheet as on 30-6-1968 substituted the names of the 15 trusts in the place of those three persons. The trust deeds had transferred certain assets to the trusts with the liability to pay the debt to the assessee from the income over a period of years and at the end of that period, the trustees were enjoined to sell the assets, discharge the debts and give the balance to the named beneficiaries. The assets transferred were shares in certain companies, such as Sree Meenakshi Mills Ltd., Loyal Textile Mills, Saroja Mills Ltd. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the debts had been removed from the wealth of the three persons thus accepting discharge of those persons to whom the assessee had no longer recourse. He, therefore, accepted that the writing off of the debt was bona fide and cancelled the assessment. 5. The revenue is in appeal to contend that the debts had been showed in the Balance Sheet for the earlier years as good and unsecured and, therefore, the writing off of the debt was without proper consideration and could not be accepted as bona fide. It was further submitted that when the trust deeds provided for the sale of the shares only after a specified time, it was not permissible to accelerate the sale and, therefore, the entire arrangement was vitiated. On the other hand, it was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtly before the previous year in question the shares held by the trusts did not yield any dividend and some of the shares were of Textile Mills which were nationalised by the Government and could no longer be considered to be good investments. The trustees, therefore, proposed : " As the shares are not yielding any dividend for some time past and as we feel that the liability cannot be discharged from out of the Dividend Income we intend to wind up the trust and exercise the powers contained in clause 4 of the Trust Deed of selling the shares in the open market at the best available rates and remit the amount in discharge of the debt." The assessee accepted it as under : " In view of what has been stated therein we have no other alter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alculated risk of getting the value of the shares available at the moment and partly discharging the debt. It is of great significance that the residuary beneficiaries did not get anything at all by winding up the trusts and those beneficiaries had also agreed to the winding up of the trusts. The assessee did not have any recourse to the original debtors since they had been completely discharged and, therefore, it is apparent from facts of the case that the decision to accept partial discharge of the debts and write off the balance was a bona fide business decision taken on commercial considerations. The circumstances did not, therefore, warrant any finding by the Gift-tax Officer that the abandonment of the balance of the debt was not bona ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
