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TMI Blog1987 (2) TMI 133X X X X Extracts X X X X X X X X Extracts X X X X ..... 000 5,524 (6) T. N. P. Durai 2,000 11,048 The aggregate amount reimbursed was Rs. 69,050. The plea of the assessee was that the value of the gifts was only Rs. 3,50,200 because the amount of gift-tax reimbursed had to be deducted from the market value following the decision in the case of CGT v. K. A. Sheik Dawood [1983] 139 ITR 261 (Mad.), viz., in other words, the assessee had pleaded that from the market value of the property, the gift-tax reimbursed had to be deducted. The GTO did not agree. He added to the figure of Rs. 3,50,200, the figure of Rs. 69,050 and the value of exempted gift of Rs. 5,000 and came to a figure of Rs. 4,24,250 from which he allowed deduction under section 5(1) of the statutory amount of Rs. 5,000 and brought to tax Rs. 4,19,250. According to the GTO, the decision reported in 139 ITR 261 had no application because in that case there were debts contracted by the donor on promissory notes and the donee in terms of the document of the gift was bound to discharge the same but that was not the position here and there was no specific charge on the property gifted. The gifts in the present case were not onerous gi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 59 ITR 694. 4. The learned counsel for the assessee, on the other hand, stated that there were only passing observations of the High Court in that case and it could not be said that the Court had pronounced on the issue, which is now before us. 5. We have carefully gone through the judgment. The High Court had stated that a perusal of the order of the Tribunal did not indicate clearly as to what were the reasons for the reduction in the value of the properties which were gifted. In the facts of that case, it has been referred, that in the documents of gift the properties gifted were valued at Rs. 30,000 per ground and the gift-tax deeds also provided that gift-tax payable would be borne by the donees. The High Court proceeded to consider the various factors which would have had the effect of depressing the value of the gifted properties and in respect of some of them the High Court stated that the Tribunal may have been right in taking the same into account. But adverting to the aspect of payment of gift-tax liability of the donor by the donees, which had been mentioned in the deeds of gift, the Madras High Court observed as under: "We are not inclined to agree with the Tribu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nership of the properties and, viewed in either way, the market value of the property gifted would be affected. The facts in that case are entirely different. 7. Another case on which reliance was placed was that reported in K. A. Sheik Dawood's case . In that case, the assessee gifted lands to 23 persons and 7 of them were required to discharge debts contracted by the assessee to the extent of Rs. 1,75,000. The High Court held that the gift was clearly a case of conditional or onerous gifts and the value of the gifted property was what it would fetch if sold in the open market subject to that condition. In this case, the donor had written letters in similar terms to each of the donees. We set out one such specimen letter dated 24-11-83 addressed to one of the donees Mrs. Lakshmi Durai: "Mrs. Lakshmi Durai, 4 Basullah Road, T Nagar, Madras 600 017. My dear Lakshmi, I propose to make a gift to you of 1000 equity shares of Rs. 10 each of Sundaram Finance Ltd. This gift will be subject to the condition that the gift-tax and stamp duty payable by me thereon shall be ultimately borne by you. In the event of my making any other taxable gifts during the previous year ending ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same person of several things of which one thing is burdened and the others are not burdened by an obligation. Nor is this gift in the form of two or more separate and independent transfers to the same person of several things of which one may be beneficial and other onerous. The present is, therefore, not a case to which the provisions of section 127 of the Transfer of Property Act would apply. The gifts cannot be labelled as onerous gifts. 8. The learned counsel submitted that under the definition of gift in terms of section 2 of the Gift-tax Act, the first part contemplated a transfer voluntarily made and without consideration. This was the same definition as under the general law. The second part included a transfer deemed to be a gift in terms of section 4, i.e., where the consideration was inadequate. According to the learned counsel, the present one was a case which would become a gift only in terms of section 4 and the consideration was inadequate and to the extent of the gift-tax paid since there was consideration the gift-tax reimbursed by the donees would have to be deducted. As far as this argument is concerned, we consider that the decision of the Karnataka High Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X
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