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TMI Blog1996 (2) TMI 173X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of the trusts of these presents; (b) Subject thereto to pay the residue of such dividends, interest and income to the said Neville Ness son of the Settlor for the period of his life; (c) After the death of the said Neville Ness Wadia upon trust to divide the Neville Ness Trust Fund No. 2 into as nearly as possible two equal moieties and to hold the same upon trust. " 3. The composition of the trust asset from the beginning to end was placed before us vide page 96 of the paper book. This is reproduced here as under : ---------------------------------------------------------- Sr. No. Date No. of shares Face value of shares Rs. ---------------------------------------------------------- 1. 13-1-1947 1001 250 (Dt. of settlement) 2. 30-3-1957 (Dt. of release by 4004 250 Mr. Neville Wadia) 3. 1-1-1964 (Conversion in lower 40040 25 denomination) 4. 10-11-1966 48048 25 (Bonus issue 1 : 5) bonus shares 8008 5. 21-12-1967 52857 25 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being the cost of acquisition as on 1-1-1964. 7. During the relevant assessment year, assessee sold the life interest for a consideration of Rs. 21,70,000 vide Agreement dated 19-3-1984, to M/s. Kapadia Trading Co. Ltd. and another. The assessee filed Profit and Loss and Balance Sheet. Loss on account of business was reflected at Rs. 1,267. It was found that loss was mainly due to motor-car expenses. In the computation sheet, assessee appended a note wherein the factum of the sale of life interest was mentioned. It was claimed that the amount is not exigible to tax as the cost of acquisition of the assessee was 'Nil'. The assessee relied on the decision of the Apex Court rendered in the case of CIT v. B.C. Srinivasa Setty [1981] 128 ITR 294 (SC) and the Income-tax Appellate Tribunal decision in the case of Gopaldas T. Aggarwal v. ITO [1983] 6 ITD 451 (Bom.). The A.O. sought direction under section 144A of the Income-tax Act, 1961. As per the directions of the IAC, the amount was added. It was contended before the CIT(A) that since 'life interest' was acquired by the assessee from his father, by way of release deed, and without any cost, capital gains tax cannot be levied. CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Departmental Representative was a gift. Our attention was invited on the provisions of section 49(1)(ii) of the I.T. Act, 1961. The learned DR took us through the facts of the case discussed in Neville N. Wadia in the case of Neville N. Wadia. It was stated that the matter was not viewed in the context of gift. Further the Hon'ble High Court construed it not a 'transfer' in relation to section 16(3)(a)(iii) of Indian Income-tax Act, 1922. This decision, according to the learned DR, cannot be applied in the facts of the present case. The matter whether it is a gift or not is to be looked into wit 12. The learned DR further invited our attention to section 4(1)(c). It was contended that where a tenant in life surrendered or relinquishes his property without consideration, the value of the interest so surrendered can be deemed to be a gift made by such person. 13. In regard to the alternative argument, apropos the ascertainment of correct amount of cost of acquisition, ld. D.R. raised no objection. 14. We have heard the rival submissions in the light of the material placed before us and the precedents relied upon. Section 49 of the Income-tax Act speaks about the cost with ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he expression 'gift' in section 2(xii) of the Gift-tax Act, differs substantially from the definition given in sec. 122 of the Transfer of Property Act, 1882. 17. The element of acceptance of the gift by a donee is lacking in the definition of the expression 'gift' under the Gift-tax Act, whereas the element is present in the definition given u/s 122 of the Transfer of Property Act. On a comparison of the phraseology of the two provisions, one may argue that in order to constitute a valid gift under the Gift-tax Act, it is not essential that the donee should have accepted the gift. Such an argument cannot be accepted especially in view of the definition of 'donee' [section 2(viii)] "as a person who acquires any property under a gift". The meaning of the word 'acquire' is given in Chambers' Twentieth Century Dictionary is 'to gain'; to attain to, Shorter Oxford English Dictionary gives the meaning as "acquires: (1) To gain to get as one's own (by one's own exertions or qualities), (2) To receive to come into possession. This connotes that the person concerned should have a positive mental attitude "to gain", "to get as one's own", to receive or to come into possession of. Moreover ..... X X X X Extracts X X X X X X X X Extracts X X X X
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