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TMI Blog2001 (4) TMI 168X X X X Extracts X X X X X X X X Extracts X X X X ..... ng a cinema theatre, exhibiting and distributing films, taking cinema theatres on hire/lease and other connected activities. While doing the IT assessment, the ITO noticed that the assessee had kept huge amounts in deposits with its sister concern M/s. Raikar Entertainments, but it had not claimed or received any interest on these deposits. Therefore, the Assessing Officer concluded that the assessee had forgone its right to receive interest on the deposits without adequate consideration and hence, he treated it as a deemed gift and initiated GT proceedings against the assessee. The assessee, however, filed nil returns of gift and pleaded before the Assessing Officer that there was no deemed gift. In consideration of keeping deposits free o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5-86 9,91,398 1,60,451 1986-87 11,82,144 2,12,785 From the amount of deemed gift as arrived at above, the Assessing Officer granted basic exemption under section 5(2) amounting to Rs. 5,000 for each of the years and on the balance amount he levied gift-tax. 3. Aggrieved by the abovesaid orders of the Assessing Officer, the assessee approached the CIT(A) before whom the decision of the Bombay High Court in CIT v. Bombay Samachar Ltd. [1969] 74 ITR 723 was quoted by the assessee. However, the learned CIT(A) was of the view that this decision did not pertain to Gift-tax matters. He held that the issue is covered by section 4(1)(a) of the GT Act, which reads as under: Section 4(1)(a): "Where property is transferred otherwise than for ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing Officer and the CIT(A) and states that the matter is squarely covered under the provisions of section 4(1)(a) of the GT Act. 6. We have considered the rival submissions and the evidence on record. The assessee was the hirer of Shakti Talkies, Hubli, from M/s. Raikar Entertainments, Hubli, who was the lessee of Shakti Talkies. The arrangement was that M/s. Raikar Entertainments would screen films supplied by the assessee for weekly consideration. The collection has to be apportioned between M/s. Raikar Entertainments and the assessee. In this way, amounts were due from M/s. Raikar Entertainments to the assessee. In the balance sheet of the assessee, M/s. Raikar Entertainments was shown as a debtor. Since this was a commercial trans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clauses comes into play in a case where no interest is charged or received by either party by mutual consent. The terms release, discharge, surrender, forfeiture or abandonment as appearing in clause (c) of section 4(1) can be invoked only when there is a pre-existing right or interest in property and in the present case when DO interest is payable by the sister concern there can be no question of any release, discharge, surrender, forfeiture or abandonment. Therefore, we are of the definite view that the assessing authority exceeded his jurisdiction by presuming that there was an element of interest which had been waived by the assessee in favour of its sister concern. In the same way, the learned CIT(A) also erred in law in coming to a c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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