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TMI Blog1985 (10) TMI 108X X X X Extracts X X X X X X X X Extracts X X X X ..... was about to take proceedings in that respect. This was stopped at the intervention of the assessee's mother who gave a letter dated 14-5-1953 to the assessee a free English translation of which is as follows : "My dear Shivraj, Your father had spoken about giving you Rs. 50 lakhs before many people and so in order that his word may be honoured and for my peace of mind I am writing you that if your brother Vikramsinhji Maharaja of Gondal does not pay you the full amount, then it is my sincere desire that you should get the balance unpaid amount from my property. Accordingly, I am recommending to Vikramsinhji also that amount has to be paid to you. With love and blessing from mother." 3. Thereafter in 1956 the elder brother Vikramsinh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the letter of 14th May, 1953 or otherwise and whatever property which remains with Her Highness shall belong to her solely and absolutely with liberty to her to gift it inter vivos or by will to whomsoever she please." 4. Another agreement was entered between the assessee and his mother on the same date regarding gift-tax liability of mother in respect of payment of the aforesaid sums of Rs. 11 lakhs and Rs. 10 lakhs. She agreed to bear that liability up to Rs. 3 lakhs and the excess, if any, was to be equally borne by herself and the assessee. It was also agreed that in case there was no gift-tax liability or it was then Rs. 3 lakhs that sum of difference was to ensure that the benefit of parties equally. The assessee received a sum of R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndered by him to his mother and levied gift-tax on that amount applying the provisions of section 4(1) (c) of the Gift-tax Act, 1958. The Commissioner (Appeals) has confirmed that order. 6. The learned counsel for the assessee put forward the following arguments : (i) When the assessee entered into agreement with his mother on 12-7-1962 the Supreme Court had not decided the matter and so the assessee settled and compromised his claim with his mother. On that date the existence of the mother's liability was not a certainty. (ii) The GTO has merely invoked the section 4(1) (c) without giving a definite finding regarding lack of bona fide of the assessee which was necessary according to the decision of the Gujarat High Court in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t for which it was settled. The assessee himself had put the value at Rs. 19 lakhs and, therefore, no question of valuation arose. 8. The assessee in his letter dated 25-7-1960 to the ITO had stated that an amount of Rs. 6 lakhs was paid to him by his father and another amount of Rs. 2 lakhs was also paid to him by his mother in 1953. On the basis of these amounts and the subsequent amounts received which has been stated above, it was argued on behalf of the assessee that he had received a full amount of Rs. 50 lakhs and so there was no gift. 9. In reply to this the learned departmental representative stated that if this full amount was receive there was no need for an agreement between the assessee and his mother for settlement, showed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rgument based on advice. He pointed out the meaning of the word 'bona fide' in Sampath Iyengar's Work on Gift-tax Act and also contended that it was not sufficient to make a reference to section 4(1) (c) but the basis of the finding regarding bona fides had also to be stated. 11. To us the most important consideration is the circumstances under which the agreement of 1962 with the.assessee's mother took place. On that date the decision of the Supreme Court was yet to come 17 years after. There was no telling when the decision would come and what it would be. From the year 1952 when the assessee's father expired there were disputes with his elder brother and later on with his mother. The mother gave a letter to him in 1953 expressing a des ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the settlement took place. The future was uncertain, vague and none rosy looking to the attitude of the assessee's elder brother and his mother. It is true that the amounts of Rs. 6 lakhs and Rs. 2 lakhs were received by the assessee from his father and mother, respectively, before the agreement with the mother and so technically this amount of Rs. 8 lakhs has to be kept out when calculating the amount due from his mother. However, when arriving at a settlement, this amount would reasonably be taken into account which would make up the total sum of Rs. 50 lakhs because the starting point of the assessee's claim was the wish of his father. The mother's letter dated 14-5-1953 refers to it and is written because of that. The reasoning between ..... X X X X Extracts X X X X X X X X Extracts X X X X
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