JAGANMOHAN REDDY,.J. - (1.) THE Tribunal has referred the following question for our consideration and opinion, viz. : "Whether, on the facts and in the circumstances of the case, the assessee is entitled to exemption of the expenditure of Rs. 10,317 for 1960 -61 assessment and Rs. 21,118 for 1961 -62 assessment under S. 5(j) of the Expenditure -tax Act. "
(2.) THE assessee and his two sons are owners in equal shares of a building called " Bellevue Palace " in Punjagutta, in respect of which the assessee incurred expenditure for repairs of a sum of Rs. 15,476 for the asst. year 1960 -61 and Rs. 31,782 for the asst. year 1961 -62. These amounts were spent on behalf of all the three of them, so that the 2/3rds share of both his sons for the year 1960 -61 amounted to Rs. 10,317 and Rs. 21,118 for 1961 -62. The assessee evidently relinquished his rights to recover those amounts from his sons and voluntarily filed a gift tax return under the GT Act and had himself assessed thereto and paid the tax. For the years 1960 -61 and 1961 -62, the assessee claimed exemption from expenditure tax for the amounts said to have been gifted by him, under S. 5(j) of the Expenditure -tax Act. Sec. 5(j) of the Expenditure -tax Act, before its amendment, was as follows : "5. No expenditure -tax shall be payable under this Act in respect of any such expenditure as is referred to in the following clauses, and such expenditure shall not be included in the taxable expenditure of an assessee . . (j) any expenditure incurred by the assessee by way of or in respect of, any gift, donation, or settlement on trust or otherwise for the benefit of any other person. "
(3.) THE Expenditure -tax Officer disallowed the claim on the ground that the expenditure was to be considered if at all only under S. 5(e) of the Act and that no exemption can be granted, as the property was under occupation of the assessee. The AAC, on appeal observed that the expenditure incurred was of a personal nature, such as repairs to refrigerators, repairs to water taps, cost of radio, salary to gardeners, safidars, etc., that the claim for treating 2/3rds of the expenditure under S. 5(j) as gift to the two sons is not clearly admissible, and that the Expenditure -tax Officer was correct in rejecting the appellant's claims. On appeal, the Tribunal did not agree with the AAC that all the items of expenditure were of a personal nature. It held : "No doubt some of the items included are clearly of a personal nature, but most of the other items would appear to have been incurred only for the upkeep and maintenance of the property jointly owned. " Two contentions were raised before the Tribunal, viz., (1) that the amounts in question represented gifts by the assessee to his sons ; and (2) that in any case the assessee had incurred the expenditure for the benefit of other persons, viz., the sons. Regarding the first contention, it was urged before the Tribunal that the assessee had already been assessed to gift -tax on these amounts. The Tribunal, however, did not accept this contention, firstly, because that fact was not conclusive, as it was obviously to the benefit of the assessee to be assessed to gift -tax as the rate of such tax was very low compared to the expenditure -tax, and, secondly, the liability to gift -tax was determined by the definition of " gift " as given in the GT Act, whereas for the purpose of the Expenditure -tax Act, there was no such definition and the word " gift " had to have the same meaning as under the Transfer of Property Act, the ingredients of which were clearly absent in this case. The second contention was also negatived by the Tribunal.;