9911796707
TMI Blog2001 (10) TMI 86X X X X Extracts X X X X X X X X Extracts X X X X ..... and, thus, it had to be "nil". The Tribunal as well as the High Court were in error in rejecting the assessee's contention that in terms of rule 11(l), no gift-tax was payable. Admittedly, there is no other provision under which the capitalised value could be fixed. In the aforesaid premises, we allow the appeals and set aside the judgment and order of the High Court, in regard to the first question aforestated. Accordingly, we answer that question in the negative and in favour of the assessee. - - - - - Dated:- 16-10-2001 - Judge(s) : S. P. BHARUCHA., Y. K. SABHARWAL., BRIJESH KUMAR JUDGMENT The judgment of the court was delivered by Y. K. SABHARWAL J.-At the instance of the assessee, the three questions that were referred t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany floated by the four outgoing partners. Under the said agreement, the firm granted licence and permission to the private limited company as a licensee to carry on and conduct the business of manufacturing Indian-made liquors, carbon papers, typewriting ribbons, etc., and for running the business handed over the premises, buildings, plant, machinery and all other equipment which were being used by the firm for the said businesses. The period of licence provided in the agreement was five years subject, how ever, to the termination by either party, giving to the other six months notice in writing. As a consideration for the agreement, the licensee agreed to pay a minimum fee or compensation of Rs. 50,000 per month and a maximum of Rs. 60, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ercial transaction whereby licence was granted by the appellant to the private limited company for running of the business by the said company for a period of five years and both the Tribunal and the High Court fell into an error in coming to the conclusion that the transfer of business under the agreement was a "gift". The Tribunal, on appreciation of the facts, has recorded a finding of fact that the consideration was less than half the value of the property. On this finding, the Tribunal concluded that to the transaction the provisions of section 4(l)(a) are clearly attracted. Section 4(l)(a), inter alia, stipulates that where property is transferred otherwise than for adequate consideration, the amount by which the market value of the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... years commencing from November 21, 1969. However, this agreement may be terminated by either party giving to the other party at least six calendar months notice in writing." The licence deemed to be a gift, is not revocable for a specified period, namely, six months. Section 6 provides for determination of valuation of gifts. It is nobody's case that sub-section (1) or (3) of section 6 has any applicability to the present case. Sub-section (2) of section 6 which is relevant here for determination of the value of the gift reads as under : "6. (2) Where a person makes a gift which is not revocable for a specified period, the value of the property gifted shall be the capitalised value of the income from the property gifted during the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he view of the Tribunal by holding that (page 398) : "Though the clause provided for revocation with six months' notice on either side, it was not acted upon. Therefore, the Tribunal was right in upholding the levy of gift-tax on the capitalised value of the gift, taking the gift as for five years". The Tribunal as well as the High Court clearly fell into an error in upholding the levy of gift-tax on the capitalised value of the gift taking the gift as for five years and treating as irrelevant the clause providing for termination at six months' notice and also taking into consideration the fact that the agreement was not cancelled within the period of five years. In our view, that is of no consequence. The language of rule 11(l) is clear ..... X X X X Extracts X X X X X X X X Extracts X X X X
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