9911796707
TMI Blog2001 (4) TMI 168X X X X Extracts X X X X X X X X Extracts X X X X ..... biting 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 of interest with sister co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sp; 4,04,075 72,733 1983-84 3,71,033 66,786 1984-85 4,91,125 88,408 1985-86 9,91,398 1,60,451 1986-87 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Ltd.'s case. The learned counsel has also brought to our notice a copy of the order of the ITAT, Bangalore in GT Appeal No. 4 (Bang.) of 1992, dated 8-7-1996 in the case of ACIT v. Mookambika Trust, where a similar issue was decided in favour of the assessee by dismissing the departmental appeal against the order of the CIT(A), who allowed the claim of the assessee. Shri Parthasarathi also points out that this is a case where there was no contractual obligation to pay interest as the deposit with the sister concern was made free of interest. Hence there was no surrender of an existing right and consequently there was no deemed gift either attracting the levy of gift-tax. On the other hand, Shri Raghavendra placed strong reliance on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not to charge or receive interest on the amount outstanding in respect of trade transactions between them. It is interesting to note in this connection that the Assessing Officer has used the terms "interest foregone" and "surrender of right of interest", whereas the learned CIT(A) has used the expression "transfer of the right to receive interest' while confirming the order of the Assessing Officer. This itself means that the Revenue authorities are not sure whether there has been an actual transfer of any existing right or whether there was any surrender of existing right to receive interest. Deemed gifts are specified in section 4 of Gift-tax Act, 1958 read with the various clauses in sub-section (1) and also the provisions of subsectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ft of interest surrendered is not justified. 7. Even looked at from another angle, there is no deemed gift in the transaction between the assessee and the sister concern as there is no inadequate consideration because of the fact that the debt is purely a trade debt and there was business connection between the assessee and M/s. Raikar Entertainments and the non-charging of interest was also part of the business deal the bona fides of which have not been doubted by the Revenue authorities. 8. For the foregoing reasons, we find merit in the plea raised by the assessee in these appeals to the effect that there is no chargeability to gift-tax. Accordingly, the orders of the lower authorities are set aside and the gift-tax assessments are l ..... X X X X Extracts X X X X X X X X Extracts X X X X
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