Decided on October 04,1968



- (1.) This is a reference made by the Madras Bench of the Income Tax Appellate Tribunal under S.26(1) of the Gift Tax Act, 1958 (hereinafter referred to as the Act) on the application of one Smt. R. Valsala Amma, who was assessed under the Act, along with her sister Smt. R. Rugmani Amma alias Subhadra Amma as an association of individuals for the year 1962 - 63 by the Gift Tax Officer, Palghat. The questions referred for decision are: (1) Whether on the facts and in the circumstances of the case, the Gift Tax Officer Palghat, had jurisdiction to make the assessment on the assessees (2) Whether on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that the assessee had made a gift of the properties in question to their brother under the Gift deed dated 8-6-1961 (3) Whether on the facts and in the circumstances of the case, the assessment of the assessees in the status of an association of Persons was proper
(2.) The applicant and her sister are the daughters of one Smt. Unni Ammalu Amma, who died on 2-5-1961. Both of them got a large number of properties under their mother's last will dated 4-12-1959. By a deed dated 7-6-1961, they effected a partition of all those properties between them, except two items of immovable properties in Palghat District. On 8-6-1961, they executed another deed, making a gift of those two properties in favour of their brother, Sri R. Rajan Menon. The Gift Tax Officer initiated proceedings to assess these ladies in respect of the said Gift. The applicant made a nil return and also wrote to the Gift Tax Officer by a letter dated 29-2-1964 stating that she was a permanent resident of Madras, that she made her income and other returns at Madras, and that the case file may be transferred to Madras City circle, if the gift tax officer so desired. Smt. Rugmini Amma made a return in respect of her one half share of the gifted properties. The Gift Tax Officer did not transfer the case; but he assessed them on the value of the gifted properties as an association of individuals.
(3.) The applicant filed an appeal before the Appellate Assistant Commissioner of Gift Tax. She raised these contentions before him: ((1) The properties were given to their brother Shri Rajan Menon, as desired by their mother; and, therefore, there was no gift by them. (2) Assuming there was a gift, it was by their mother; and hence the tax should be recovered from the donee; and (3) The Gift Tax Officer should have transferred the case to the Madras City Circle. All these contentions were rejected and the appeal was dismissed by the Appellate Asst. Commissioner. The applicant then filed an appeal before the Income Tax Appellate Tribunal, before whom she raised the following three contentions. (1) The Gift Tax Officer, Palghat had no jurisdiction to make the assessment; (2) The real donor was the applicant's mother; and the assessees were not, therefore liable for the tax; and (3) The status of association of individuals assigned to the assessees was wrong. These contentions were rejected by the Appellate Tribunal; and the appeal was accordingly dismissed. The same contentions have been raised before us in this reference.;

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