9911796707
TMI Blog1986 (8) TMI 30X X X X Extracts X X X X X X X X Extracts X X X X ..... gs, the assessee contended that as Lira Raja Sahayak Trust was a charitable trust whose income was exempt from income-tax under section II of the Income-tax Act, 1961, the gift made to the said trust was exempt from gift-tax under section 5(1)(v) of the Gift-tax Act. The Gift-tax Officer did not accept the contention of the assessee and held that the gift was made first and the trust fund was created subsequently out of the gift and, therefore, the assessee was not entitled to the exemption claimed. He held that only where a gift has been made to an existing charitable fund or institution, the question of exemption from gift-tax would arise. The Gift-tax Officer disallowed the exemption claimed by the assessee under section 5(1)(v) of the G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said decision of the Bombay High Court, the Appellate Assistant Commissioner held that initial gifts made to the trust were also entitled to exemption. He held further that, in any event, the gift in the instant case was made subsequently in the account of the trust. The appeal of the assessee was allowed and the said amount of Rs. 1 lakh was directed to be excluded in computing the gift-tax to be paid by the assessee. Being aggrieved, the Revenue preferred an appeal before the Income-tax Appellate Tribunal. The contentions of the parties made in the proceedings below were reiterated before the Tribunal. The Tribunal considered the said decision of the Bombay High Court and upheld the order of the Appellate Assistant Commissioner hold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceedings initiated under the Gift-tax Act, the Gift-tax Officer held that the assessees concerned were not entitled to exemption under section 5(1)(v) of the Gift-tax Act as the initial gifts were not made to fund established for a charitable purpose and as the same were made before the execution of the trust or the creation of the fund. The gifts having been made first and the fund having been created subsequently out of the gifts, the assessee was not entitled to exemption in respect of the initial gifts of shares. On a reference, a Division Bench of the Bombay High Court held that under section 5(1)(v) of the Gift-tax Act, 1958, even the initial gifts which were made for the purpose of starting or constituting a fund for charitable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the gift was being given to and could only be accepted by an existing trust or an institution. We also note that the cheque was encashed in the bank account of the trust subsequently. These facts are sufficient to hold that the gift in question fell within the four corners of section 5(1)(v) of the Gift-tax Act and was entitled to exemption. Even otherwise, the said gift should be entitled to exemption under section 5(1)(v) of the Gift-tax Act on the authority of the decision of the Bombay High Court in Yogendra N. Mafatlal's case [1965] 58 ITR 40. No other High Court has taken a different view and we see no reason to do so. For the reasons as above, we answer the question in the affirmative and in favour of the assessee. There will ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
