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TMI Blog1971 (8) TMI 41X X X X Extracts X X X X X X X X Extracts X X X X ..... l was justified in law in treating the transaction in question as exempt under section 5(1)(xiv) of the Gift-tax Act, 1958 ? " The reference relates to the assessment year 1964-65 the accounting period being the year ending with August 16, 1963. The assessee was the sole proprietor of a boarding and lodging house at Alleppey by name, Dhanalakshmi Vilas. With effect from August 17, 1962, the assessee converted his proprietary business into a partnership with N. Ramakrishnan Poti and N. Viswanathan Poti, who were his employees. The partnership is evidenced by the deed dated December 4, 1962, a copy of which is produced as annexure " A ". The Gift-tax Officer took the view that by taking the two partners in the business the assessee parted w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) in the course of carrying on a business, profession or vocation, to the extent to which the gift is proved to the satisfaction of the Gift-tax Officer to have been made bona fide for the purpose of such business, profession or vocation. " Two conditions must be satisfied in order that the above proviso can apply. The first is that the gift should be made in the course of carrying on a business. The second is that the gift should have been made bona fide for the purpose of the business. In Commissioner of Gift-tax v. Dr. George Kuruvilla in interpreting section 5(1)(xiv) of the Gift-tax Act, 1958, a Division Bench of this court took the view that the above provision can apply if it is shown that the gift was made on grounds of commerci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gift to Thomas was ' in the course of carrying on the business ' of the donor, and ' for the purpose of the business '. " The assessee was claiming the benefit of an exemption from liability to pay tax and the burden is on him to prove facts which will entitle him to the benefit of section 5(1)(xiv) of the Gift-tax Act, 1958. Apart from producing the gift deed no evidence was adduced by the assessee. The Appellate Tribunal upheld the claim for exemption merely on the ground that the gift was made on commercial expediency and in order to directly or indirectly facilitate the carrying on of the business. The preamble of the partnership only shows that N. Ramakrishnan and N. Viswanathan were helping the assessee in his business and they were ..... X X X X Extracts X X X X X X X X Extracts X X X X
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