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TMI Blog2013 (8) TMI 767X X X X Extracts X X X X X X X X Extracts X X X X ..... atter to the Tribunal to pass a fresh orders in the light of above discussions as per law. - Income Tax Appeal (G.T.) No.104 of 2005 - - - Dated:- 27-8-2013 - Hon'ble Rajiv Sharma And Hon'ble Dr. Satish Chandra,JJ. ORDER (Delivered by Hon'ble Dr. Satish Chandra, J) Both appeals have been filed by the department under Section 26-A of the Gift Tax Act, 1958, against the consolidated order and judgment dated 28.02.2005 passed by the Income Tax Appellate Tribunal, Lucknow in G.T.A.Nos.11 15/Alld/1998, for the assessment year 1990-91. On 19.09.2005, a coordinate Bench of this Hon'ble Court has admitted both the appeals on the following substantial questions of law:- (i)Whether the Hon'ble Tribunal has erred in law in holding that there was no deemed gift within the meaning of section 4(1)(c) of the Gift Tax Act in respect of the interest amount of Rs.1.70 crores surrendered/ abandoned by the respondent in favour of its sister concerns? (ii)Whether the Hon'ble Tribunal was justified in law in holding that there was no deemed gift within the meaning of section 4(1)(c) of the Gift Tax Act as there was no contract, expressed or implied between the respondent and its si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds. Being a finance company, the assessee should have earned the interest income of Rs.3.3 crores, but it had shown only Rs.1.63 crores. The balance (3.3-1.63=1.7) interest amount of Rs.1.70 crores in favour of the sister concerns of Sahara Group was not charged and the same was rightly brought under the purview of Section (1) (c) of the Gift Tax Act. Mr.Chopra further submits that the assessee has filed the return of 'nil' income. The assessee has charged the interest from the sister concerns @ 18%. The assessee-firm itself has paid the interest @ 18% to the sister concerns, namely, M/s Sahara Savings and Finance Pvt. Ltd., Gorakhpur; and M/s. Sahara Investment India Ltd., Gorakhpur. The asseessees are engaged in financial activities and should have earned interest on the total funds available with them. The assessees have not charged the interest on the advance given to the sister concerns and it amounts 'deemed gift'. The assessees have been increasing loss year after year. In the instant cases, the assessees-company abandoned/surrendered interest income in favour of sister concern. He further submits that Section 4 (1) (c) of the Gift Tax Act provides the 'abandonment' which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y existing movable or immovable property made voluntarily and without consideration in money or money' s worth, and [includes the transfer or conversion of any property referred to in section 4, deemed to be a gift under that section];" He also submits that in view of the above provision, the Assessing Officer has wrongly made the additions of notional interest and the same is not tenable in the eye of law and cannot be added. He further read out Section 2 (xxiv), which on reproduction reads as under:- "transfer of property" means any disposition, conveyance, assignment, settlement, delivery, payment or other alienation of property" He submits that a reading of this Section clearly shows that the word 'disposition', 'conveyance', 'assignment', 'settlement', 'delivery' and 'payment' are used as some of the modes of Transfer of Property. He also relied on the ratio laid down by this Hon'ble Court, in the case of Commissioner of Income Tax (Central) vs Shri O.P. Srivastava others, ITA No.32 of 2006 and other connected appeals, where departmental appeals were dismissed vide judgment and order dated 30.5.2013, but on specific query by the Bench, he admits that in the case of Sri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the year in which the interest free loan was advanced by the respondent. This event took place in the earlier year and in fact no steps to assess any gift-tax in those years was taken up by the revenue. On the other hand, if the revenue was right in its view that the gift takes place from year to year when the interest for the particular year is not charged, then it may be pointed out that it is only for the assessment year 1990-91 that the revenue has brought to tax such alleged gift. In fact, in none of the earlier years as also in the subsequent years, the revenue took any steps to bring to tax pertaining to the aforesaid transactions. It is therefore submitted that the conclusion of the CIT (A) and the Tribunal that the respondent-assessee was not liable to pay any gift-tax in terms of Section 4 (1) (c) of the Act is correct and must be sustained. It is also a submission of the learned Counsel that there was no agreement for payment of the interest on the loans/advances given by the assesssee to his sister concerns. It is therefore submitted that the present appeals may kindly be dismissed with cost. In support of his submissions, he has relied on the ratio laid down in the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t or interest can be defined as a conscious renunciation of right of ownership. The definition of 'abandonment' means 'give up of a thing or a right'. It is evident from the definition that 'abandonment' could be made by the person of a thing, i.e. a property, on which he has a right. If a person has no right on a thing, the question of 'abandonment' of such thing by him does not arise. It may be mentioned that Hon'ble Apex Court in the case of CIT vs. Alga Sundaram Chettiar, [2001] 252 ITR 893, 894, observed that the term "payment" must not be given a literal interpretation but it must be seen whether a jural relationship of debtor and creditor was created between the parties and it was not necessary that payment should have been made in cash or in specie to the assessee. In the instant case, it is undisputed fact that the assessee has taken the advances/loans on the interest @ 18%. Equal interest was charged from some of the sister concerns. But no interest was charged from a few selected sister concerns. For this discrimination, neither any reason was given by the assessee nor the authorities below including the Tribunal have examined this aspect. Undoubtedly, the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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