Law:

Section:

Section 3 of the Gift-tax Act, 1958 - Charge of gift-tax - Assessment year 1960-61 - Assessee executed a deed of gift on 26-11-1956 in favour of her minor grandsons - Gift deed was accompanied by actual delivery of share certificates and accepted by mother of minors on their behalf - Shares were transferred by company on 9-5-1958 - Whether on facts it could be said that gifts were completed on 26-11-1956 and were not taxable under Act - Held, yes FACTS The assessee executed the gift deeds on 26-11-1956 in respect of certain shares to her minor grandsons. The execution of the gift deed was accompanied by the actual delivery of shares certificates and blank transfers. The mother of the minors accepted the gift on behalf of her minor sons. The registered gift deeds were forwarded to the company and transfers were effected in the names of the minors on 9-5-1958. The GTO held that the gift was taxable under the Act which came into force with effect from 1-4-1958. On appeal, the assessee contended before the AAC that the gifts were completed on 26-11-1956 and were not liable to gift tax. The AAC allowed the assessee's claim. On appeal by the revenue, the Tribunal upheld the order of the AAC. On reference : HELD In the instant case the revenue did not get a copy of articles of the company included in the paper book. Nor was copy of the articles produced. It was not, therefore, be said that the transfers made by the assessee on 26-11-1956, were not in accordance with section 82 of the Companies Act. The regulations in Table "A" (regulation 19-24) as well as sections 108, 110 and 111 deal with the question of getting the transfers registered in the books of the company. The beneficial interest in the shares can pass from the holder to another person without complying with these provisions. When the beneficial interest in shares is transferred by the donor to the donee the gift is complete for purposes of the Gift-tax Act. Accordingly the Tribunal rightly held that the gifts in the present case were completed on 26-11-1956, and were not taxable under the Act, 1958, which came into force only on April 1, 1958. Note : The case has been decided in favour of the assessee.…

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