Gift Tax on Agricultural Land - Constitution of India Art.248(1) and (2) and Seventh Schedule, List 1, Entry 97 and List II Entry 47 - Parliament has ample powers to enact to levy gift tax on agricultural land. [Jose v. GTO 1961 KLT 859.]

 Proprietary business of assessee converted into partnership business taking his three major sons as partners - Sons contributing amounts received as gifts from assessee - Whether goodwill of the business has been transferred.-  Goodwill itself is property and has a value of its own apart from the other assets of the business.  When the assessee entered into a partnership to carry on the same business there was a transfer of the goodwill.  As the assessee did not receive any consideration for transferring the goodwill of the business to the firm, there was gift in respect of the goodwill under S.2(xiii).  As it was not proved that the gift was made in the course of and for the purpose of the business, it was not entitled to exemption under S.5(1) (xiv). [Commr. of Gift-tax v. Ganpathy Moothan (1972) 84 ITR 758.]

 Gift-requirements - Vesting in transferee is necessary.-  There cannot be a gift in law without vesting of the property gifted in the transferee and such vesting cannot take place without the consent or the concurrence of the donee. [Commr. of Gift-tax v. Kesavan Nair 1973 KLT 481.]

 Status - Persons holding property in equal shares as tenants-in-common - Gift in one document - Donors could not be assessed as association or body of individuals but only as individuals. [Commr. of Gift-tax v. R. Valasala Amma 82 ITR 828(SC) (1971).

Abandonment of debt - Requirements of - Assessee writing off a debt due from his brother - Effect. -  It was not a case of abandonment.  There was only an attempt to make it appear that the debt was a bad debt and had become irrecoverable.  The writing off by the assessee in his books of account of the amount due from his brother did not amount to a gift. [CGT v. Kochuthommen 98 ILR 394(1975).]

 Assessee proprietor of business - Partnership formed with daughters - Daughters' contribution to capital made by transfer from assessee's account - Business assets of assessee including goodwill transferred to partnership - Goodwill cannot be treated separately for purposes of gift-tax-Exemption-Gift "in the course of" and  "for the purpose" of assessee's business - Gift to daughters not exempt. [CGT v. P. Geevarghese 83 ITR 403 (SC) (1972)]

 Assessee converting his sole proprietary business into a partnership business by admitting daughters as partners. Share capital contributed by assessee. Gift of amount representing share capital of daughters not exempted under S.5(1) (xiv).-  The expression 'in the course of carrying on of business' etc means that the gift should have some relationship with the carrying on of the business.  If a donor makes a gift only while he is running the business that may not be sufficient to bring the gift within the first part of Cl. (xiv) of S.5(1).  To bring the gift within S.5(1) (xiv) there has to be some integral connection or relation between the making of the gift and the carrying on of the business. [CGT v. Gheevarghese. AIR 1972 SC 23.]

Business converted into a partnership concern partners being assessee, his wife, two sons and five daughters Sons had experience in the business-Gift of goodwill in favour of daughters if entitled to exemption.-  It cannot be held that the gifts in favour of daughters were necessary for carrying on the business or they were made really for the purpose of the business. [Krishnankutty Nair v. CGT 110 ITR 541(1977)].

 Exemption - Burden of proof - Deed of gift - Liabiility or exemption cannot be determined without deed. Burden of proof on the assessee [CGT v. Dr.George Kuruvilla 74 ITR328(SC) (1969).

Exemption - Gift made in the course of carrying onn a business - Conversion of proprietary business into partnership concern - Transaction not exempt - Scope of S.5(1) (xiv) discussed.  [CGT v. R. Narasimhan Potti 83 ITR 296 (1972).

Exemption - Gift "in the course of carrying on of business"- Meaning of - Admission of new partner in firm and gift of shares to him - Original partners unable to carry on business efficiently - New partner already assisting them - Gift of shares to new partner is in the course of business - Is entitled to exemption - Reference - Question whether gift was for purpose of business not purely one of fact.  It is not necessary that the work of the firm would have come to a stop or would have been seriously curtailed but for the taking of the partner.  Nor is it necessary that the affairs should be left wholly to new partner.  [V.O. Markose v. CIT 1974 KLT 461}

Sole proprietor of business forming partnership with daughters - Contributing 1/16^th of capital out of moneys given y father, but entitled to 1/3 of profits-Gift-Tax not payable on 2/3^rd of goodwill also - Arrangement involving gifts, to continue business - Exemption from tax - Gift-Tax Act, 1958, S.5(1) (xiv),. [CGT v. P. Gheevarghese 68 ITR 132 (1968)].

Condition for exemption-Doctor continuing to practice, making gift of properties to his doctor son-Exemption if can be claimed.-  The two ingredients to be satisfied in order to attract S.5(1) (xiv) areL1) that the gift deed was made "in the course of carrying on a business, profession, or vocation", and (2) that it was made "for the purpose of such business, profession or vocation".  The assessee was a doctor by profession and was continuing to exercise the said profession at the time of the gift.  The gift was therefore in the course of carrying on of the profession.  The next question is - Waste gift made for the purpose of the business:  It would be enough to show that the gift was made on grounds of commercial expediency and in order to directly or indirectly facilitate the carrying on the business, profession or vocation.  It is not further necessary to prove that any benefit actually accrued to the business or that the gift was made with a view to earn profits for the business.  The gift is therefore exempted under S.(1) (xiv).  [CGT v. Dr. George Kuruvilla 1965 KLT 721.]

 Conversion of proprietary business into partnership inducting brothers of assessee - Conditions to be satisfied for attracting the exemption.-  For the application of the section two conditions are to be satisfied.  The first is that the gift must be in the course of carrying on of the business.  The second is that the gift must have been made bonafide for the purpose of such business. [CIT v. Devadevans 91 ITR 464(1973).

 Exemption - Gift made in the couse of business - CConversion of proprietary concern into firm.-  The expression "in the course of carrying on of business etc." means that the gift should have some relationship with the carrying on of the business.  Where the dominant intention behind the partnership is to promote the busines and strengthen the same and not merely to benefit the sons of the assessee, the gift is exempt under S.5(1) (xiv). [CGT v. K.J. Pothen 87 ITR 256 (1973).]

Bona fide gift for the purpose of business-Exemption of tax - Requirements of.-  Assessee converted his proprietary business into a partnership concerns taking in his children and transferred a sum of Rs.50,000 out of his capital account in his business to his children.  Held that the mere conversion of a proprietary business into a partnership concern without anything more is not enough to satisfy the requirements of the section. [CGT v. Narayanai Amma 1972 KLT 9.]

Two conditions to be satisfied are: (1) the gift should have been made in the course of carrying on a business; (2) the gift should have been made bona fide for the purpose of the business. [CGT v. Narasimha Rao Potti. 83 ITR 296 (1972).

Scope and application - Conditions for the exemption to apply - Burden of proving the facts which would bring a gift within the scope of the exemption is on the assessee. [CGT v. Narasimhan Potti. 1971 KLT (SN) 52.

Deemed gift-Assessee and his sons partners in the firm - New deed of partnership constituted and assessee relinquishing part of his share in favour of sons-Assessee continuing to be dominant partner even after relinquishment - No change in conduct of business after adjustment of profits and shares - Relinquishment amounted to deemed gift liable to gift tax - Exemption - Business carried on by firm and not be assessee (individual) - gift was not of property of firm - Assessee (Individual) not entitled to exemption from gift-tax.  [K.K. Achuthan v. CIT 170 ITR 518(1988.)].

Assessee partner in firm having one fourth share - Assessee retiring from firm and in his place his wife and daughter in law admitted as partners taking one-eighth share, each - No material to show that as per origina partnership agreement assessee had right to nominate his successor in firm - Wife and daughter-in-law could be admitted as partners in firm only with the consent of other partners - No relinquishment or transfer of any right of assessee to the other partners or to wife and daughter-in-law took place - Act of the assessee does not amount to gift resulting in charge of gift tax.  [CIT v. T.M. Porinchu 178 ITR 677 (1989).]

S.6 Gift of unquoted shares of a company - Mode of valuation - Provisions of rules under Wealth Tax Act can be applied. [CIT v. Mammen Mathew 1985 KLT 749.]

Valuation of property - Charges and liabilities not mentioned in gift deed - Are deductible. [Kutty Sahib v. CGT. 55 ITR 146(1965.)]

Gift of shares not listed in Stock Exchange on 25-3-1971 - Value fixed in the balance sheet of the company as on 31-3-1970 should be taken as the proper value.-In regard to a sale of shares effected before the end of the year in the normal course the information available would be the material as the financial position of the Company as on the last day of the previous year.  The position must necessarily by different in a case where what are sold is shares listed in the Stock Exchange in which case the value as quoted by the Stock Exchange on the date of a gift may be relevant. [CGT v. H.H. Sethu Parvathy Bai 1983 KLT 444.]

 Ss.15(1) & 24(2)-Assessee (father), owner of a plantation, running it as proprietary concern - Business converted into partnership of assessee and his son - Son contributing Rs.1 lakh as his share of capital for partnership business - Assessee transferring his interest in proprietary business to partnership - Transaction does not involve gift.- Assessee not challenging finding of GTO as to existence of gift - Amount taxable is value of asset gifted after deducting Rs.1 lakh. [CGT v. V.M. Philip 154 ITR 819 (1985).]

S.32 Gift Tax Officer determining tax payable - Appeal by assessee allowed and tax reduced - Revenue appeal dismissed - Reference to High Court answered in favour of Revenue and order of GTO restored-Assessee is liable to pay interest on original amount determined by GTO. [Mohammed v. GTO 1987(1) KLT 720.]

 S.32(2) Recovery of tax -Interest - Assessment of assessee completed and tax payable determined - Assessee allowed to pay tax in installments - Some amount paid in installments - Tax reduced in appeal by AAC and assessee becoming entitled to refund of tax - Refund withheld by Commissioner - Tribunal dismissing revenue's appeal - On reference, High Court answering question in favour of Revenue and order of GTO restored - Assessee liable to pay interest on unpaid amount of installments of tax. [Mohammed Essa Moosa Sait v. GTO 167 ITR 338(1987).]

 Deemed gift - Assessee converting his proprietory business into partnership firm on 1-1-1968 - Three partners inducted into firm - Right to future profits t a certain extent surrendered to incoming partners - Amounts to be deemed gift - Devaluation of Indian currency on 6-6-1966 - Valuation of deemed gift - devaluation profit whether deductible - Devaluation profits is a trading profit - Effect of devaluation continued even ffor subsequent years - Devaluation profit represented as part of the sale proceeds - For goods supplied, assessee got appreciated value - Devaluation profits not deductible in computing value of deemed gift. [P. Gangadharan Pillai v. CGT 170 ITR 514(1988).]

 Appeal - Pendency of appeal - Order of judicial or quasi-judicial authority although not final, is provisionally executable, subject to restoration.  [Mohammed Essa Mossa Sait v. GTO 167 ITR 338(1987).

Assessee gifting to her son the business with all assets and liabilities including the goodwill-Gift tax officer estimating the value of business and good-will-Assessee contending that what was transferred to the son was the property bequeathed to him by her late husband to whom the property belonged an that she was only acting as an executrix under the will-Sustainability.-  Even if the assessee is an executrix under the will, an interest has been crated in her favour in the properties.  It is only after her death that the donee and the other sons of the testator are entitled to have the properties given to them.  The Gift-tax to be levied should be on the value of the life interest of the assessee in the properties comprised in the gift deed. [Kunjram Joseph v. CGT 1972 KLJ 265.]

 Reference - Advisory jurisdiction of the High Courrt - Power to reframe the question referred and answer a question not in controversy.-  It is not sufficient if a question arises out of the order of the Tribunal.  It is also necessary that the question must be one referred to the High Court.  The powers of the High Court are limited to answering the question which is referred under S.26(1).  It is not the final result that is material.  The one and only question is, what exactly is the scope of the question referred. [Jacob v. CIT 1973(1) ILR 138.]

 Reference - Appeal to Tribunal - Valuation of giftt by GTO set aside and different valuation adopted by Tribunal -Basis for valuation not disclosed in order of tribunal - Question whether valuation of gift by Tribunal was reasonable - Question of law fit to be referred to High Court. [CGT v. K.H. Abraham 177 ITR 205 (1989).

 Reference - Question whether tribunal was right inn holding that no transfer had been made and, therefore, there was no gift is a question of law to be referred. [CGT v. H.H. Sri. Rama Varma Maharaja of Travancore 173 ITR 357 (1988).]

 If the Tribunal is incorret and a question of law did arise from such order the court will compel a reference. [1976 KLT (SN) 81.]

 Reference -= Transfer of shares at cost to relativves - Share had been shown by assessee in his wealth-tax return - Tribunal holding that assessee was a benamidar and that the shares really belonged to his relatives - No material to support Tribunal's findings - Tribunal whether justified in holding that there had been no gift - Question of law fit to be referred to High Court. [CGT v. G. Lakshmana Sarma 178 ITR 211(1988).]

 Penalty - The donees become liable for penalty oonly when a demand is made on him for payment of tax and he commits default. [Kamalammal v. GTO 1961 KLJ 1356.]

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