9911796707
TMI Blog1998 (1) TMI 47X X X X Extracts X X X X X X X X Extracts X X X X ..... nder section 5(1)(xiv) of the Gift-tax Act, 1958 ?" The assessee filed his return of gift in respect of the assessment year 1967-68 on May 15, 1973, declaring therein "nil" gift. However, in annexure "D" of Part II of the return of gift it was mentioned that a donation of Rs. 55,000 was made by the assessee to the Gujarat Pradesh Congress Committee, Ahmedabad, for its election fund, which, according to the assessee, was exempt under section 5(1)(xiv) of the said Act. The assessee was doing the business of running a solvent extraction plant and its products of de-oiled cakes were being exported. According to the assessee, the donation was made during the course of business and for the purpose of business inasmuch as, by such donation, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r consideration reads as under :--- "5. (1) Gift-tax shall not be charged under this Act in respect of gifts made by any person---.... (xiv) 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 :...." The assessee's case has been that the said amount was donated to the said political party for its election funds so that when the party comes to power it can frame its policies in a manner that would further the interests of the assessee. "Gift", as defined in section 2(xii) of the said Act, means "transfer by one person to another of any existing movable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to power, there is no guarantee that those who are elected and form the Government will remain under a feeling of obligation and will show undue benefits to the assessee who had contributed to the funds. There cannot be any assumption that the elected representatives will act irresponsibly by showing undue favours to the assessees who had helped them by contributing funds. In a country where the rule of law prevails, one cannot act on an assumption that the policies of the Government will be guided by such irrelevant and personal motives of reimbursing the assessees, who may have contributed to the funds of the ruling party, by framing policies that may suit them. There is a distinction between a Government and a political party. Even when ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd is advised that in cases where a gift made to a political party is made by a company under the authority of a specific clause in the memorandum and articles of association of the company, the gift has to be held as having been made in the course of carrying on the business of the company and exempted from gift-tax." It is observed that the said circular was prompted by the decision of the Bombay High Court in Jayantilal Ranchchoddas Koticha v. Tata Iron and Steel Co. Ltd. [1957] 27 Comp Cas 604 ; 59 BLR 738 in which it was observed that "if an individual can contribute to the political funds of a party, in law it is difficult to understand how a company can be prevented from doing so." The Tribunal relied on the observation made by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve of securing benefits, should an uncertain event of that political party coming to power occur. The context in which Jayantilal's case [1957] 27 Comp Cas 604 (Bom) was decided being entirely different, its ratio will not apply, by ignoring the provisions of the said Act, to donations made to political parties where tax exemption is claimed under a specific provision of section 5(1)(xiv) which alone will govern the field. The circular dated January 5, 1960 referred to by the Tribunal has been issued in the context of the decision of the Bombay High Court in Jayantilal's case [1957] 27 Comp Cas 604 and in view of what we have said on the provisions of section 5(1)(xiv) of the Act, it cannot assist the assessee whose donation to the G.P.C.C. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o prevent its extinction on his death. It is in this context that the Supreme Court held that the fact that the donor made a gift while he was running the business was not sufficient to bring the gift within the exemption under clause (xiv) of section 5(1) of the Act. It had further to be established that there was some integral connection or relation between the making of the gift and the carrying on of the business and the object in making the gift or the design or intention behind it had to be related to the business. We fail to understand as to how the Tribunal has placed reliance on the ratio of this decision in para 4 of its judgment. The decision, in fact, reinforces what we have said on the aspect of the gift having connection with ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
