9911796707
TMI Blog2010 (4) TMI 791X X X X Extracts X X X X X X X X Extracts X X X X ..... l ought, in any event, to have held that even if there was a gift by the applicant, such gift was exempt under section 5(1)(xiv) of the Gift-tax Act, 1958 ?" Statement of case 2. The aforesaid questions of law giving rise out of the order of the Tribunal were drawn up by the Tribunal based on the statement of case appearing hereunder : (a) The assessee is a private limited company. This company was said to have been managed up to December 18, 1981, by the two groups of shareholders, viz., Kantilal group and the Pannalal group, each holding 747 shares of the face value of Rs.1,000 each. Some dispute is alleged to have cropped up between these two groups, inter se and also between these groups and the company, inter alia, regarding the entitlement of the specific parties to the sum of Rs. 80 lakhs receivable from a firm called M/s. Seth and Mehta Associates for the sale of surplus FSI. The matter was referred to an arbitrator, who gave an award on December 18, 1981. This award was approved by this court on January 16, 1982. As per this award the Kantilal group transferred all their 747 shares in the assessee-company for a price of Rs. 100 per share to the Pann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... saving its honour. According to the Tribunal, no cogent material was placed to show that the arrangement or agreement was arrived at with the object of com-promising disputable rights or for preserving the family property. The Tribunal observed that the company is a distinct legal entity. It has got its separate existence. The property of the company cannot be equated with the family property. More so, nothing was on record which could suggest the existence of a family dispute. According to the Tribunal, the shareholders imputed certain charges as regards the mismanagement of the company. Beyond that nothing was placed before the Tribunal to show the existence of a family dispute or possibility of a family dispute. In the absence of dispute, the Tribunal could not conclude that the arrangement was made to secure peace and harmony amongst the members as well as the properties belonging to them. The Tribunal held that there was no supporting material that the dispute before the arbitrator was concerning the properties of the company and was not in relation to the property of the family. As such, according to the Tribunal, the said transaction could not be put within the umbrella of f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the Kantilal group. That the entire settlement was apparently entered into with a view to benefiting certain shareholders and that the benefit to the shareholders could not be equated with the benefit to the company. (g) It is stated that the essentials to be fulfilled in order to be a gift, within the meaning of the Gift-tax Act are that there must be a transfer by one person to another ; that the transfer should be of any existing movable or immovable property ; that the transfer must be made voluntarily ; and the transfer must be made without consideration of money or money's worth. The Tribunal found that there was a transfer by the assessee company to one group of shareholders of the company's properties. It was voluntary in nature and the absence of consideration was evident. In view of this, the Tribunal upheld the order of the Commissioner of Gift-tax (Appeals) affirming that the transaction was exigible to gift-tax. Rival submissions 3. At the outset, Mr. Irani, learned counsel for the applicant appearing with Mr. Jasani, urged that the burden of establishing the existence of gift is on the Revenue. According to him, the gift must be a transfe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... having assessed the Kantilal group to capital gains in respect of the same transaction, the same transaction cannot again be levied with gift tax. In support of his submission he placed reliance on the judgment of the Supreme Court in the case of K. P. Varghese v. ITO [1981] 131 ITR 597. 8. Per contra, Mr. Kamwal, learned counsel appearing for the Revenue, reiterated the submissions which were advanced before the Tribunal and mainly relied upon the findings recorded by the authorities below. Consideration 9. While hearing the rival submissions, a copy of the arbitration award was placed before us which was later on converted into rule of the court (adecree) ; wherein the factual genesis of the transactions is to be found in para. 24 thereof, which reads thus : "24. I received another letter dated November 30, 1981, addressed to me by all the parties. Under cover thereof they filed a writing of the same date executed by them. By the said letter the parties requested me to close the reference and to give an award accordingly. By the said writing which is in the form of an agreement of a settlement the parties have, inter alia, agreed that for the reasons ment ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
