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TMI Blog1995 (4) TMI 33X X X X Extracts X X X X X X X X Extracts X X X X ..... pect of the gifts made by the assessee, as the gifts are exempt under section 5(1)(ii) of the Gift-tax Act, 1958 ?" The assessee, Abdul Kader, is a non-resident within the meaning of the Income-tax Act, 1961. He is also a non-citizen of India. During the assessment year 1974-75, he made a gift of Rs. 43,000 by purchasing a draft from a bank in Malaysia in the name of Thirumathi Nachia, who is his wife, and sending the same to India through the authorised channels of transmission of money. Nachia, wife of the assessee, received the draft and then distributed the money between herself and her son. So also for the assessment year 1976-77, a similar draft for Rs. 40,000 was purchased by the assessee and sent to Nachi, who is resident in India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al confirmed the order passed by the Appellate Assistant Commissioner. Learned standing counsel appearing for the Department, submitted that though the draft was purchased in Malaysia in the name of the wife of the donor, it was accepted by the donee only in India. Therefore, the gift was completed in India as per the provisions of section 125 of the Transfer of Property Act. Learned standing counsel further submitted that when the gift was completed, the movable property was situated in India and, therefore, exemption under section 5(1)(ii) of the Act is not possible in the case of the assessee. Learned standing counsel further submitted that the gift was sent according to the desire of the donor and not according to the desire expressed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ough the post office, then, it can be said that the post office acted as an agent of the donee. In such a case, the gift would have been completed in Malaysia. In the case of Rajkumar Mills Ltd. v. CIT [1976] 103 ITR 92, the Bombay High Court while considering the provisions of section 4(1)(a) and section 10(5)(b) of the Indian Income-tax Act, 1922, adumbrated the following principles for granting exemption with regard to the gifts made from outside India (headnote) : " The principles which govern cases where payment is received by cheques, demand drafts or hundies are well-settled in view of the decisions of the Supreme Court in Ogale Glass Works' case [1954] 25 ITR 529 ; CIT v. Kirloskar Bros. Ltd. [1954] 25 ITR 547 and Shri Jagdish ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the names of the sons and wife of the assessee and not with reference to the remittances made by the assessee by way of drafts from the foreign country ? Are the gifts exigible to tax ?", the Kerala High Court held that in view of the abovesaid finding of the Appellate Assistant Commissioner, the assessee is entitled to exemption under section 5(1)(ii) of the Act of the gift made by the husband to his wife by way of sending money through drafts from foreign country. According to the facts arising in this case, there is no evidence on record to show whether there was any prior contract between the husband and the wife expressly or impliedly to send amounts from Malaysia by way of draft through the post office. If that is so, the post of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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