Law: Gift Tax Act, 1958

Section: 2,2(xii),5(I)(xii),6

[Indian Gift Tax Act, 1958]........Sections 2(xii), 5 (I) (xii), 6-Gift Tax Exemption Properties gifted for education of children Reasonableness of gift-income derived from gifted properties during the period of education Whether can be taken into consideration Held no-Computation of tax--Whether to be made with reference to value of corpus-Hold yes The assessee made gifts of his immovable properties to his four children to meet their educational needs. In his gift tax return he vained the said property at Rs. 1,741,080 and claimed the entire sum to be exempt from gift tax under section 5 (l) (xii) of the Gift Tax Act, 1958. The Gift Tax Officer accepted the purpose of the gift as stated in the gift deed, but, while allowing the deduction under Section 5(1) (xii), took into account the income earned from the property gifted. The officer estimated the value of the gift at Rs, 2,43,500, and after deducting the income from the property during the period necessary for education of all the donees, allowed deduction of only Rs. 1,03,400 representing the total expenses calculated as allowable, The balance of Rs. 1,410,100 was taxed for the purpose of gift tax. On appeal by the assessee, the Appellate Assistant Commissioner enhanced the estimated amount required for educational purpose of all the donees at Rs. 1,69,030 and also reduced the valuation of the gifted property. The Appellate Assistant Commissioner held that the income from the gifted properties was not an element forming part of "the circumstances of the case" to be taken into account for determining the reasonableness of the gift allowable under Section 5 (1) (xii). On appeal by the department, the Appellate Tribunal agreed with the Appellate Assistant Commissioner and held that gift tax being levied on the corpus of the gifted property, the exemption was also related to the corpus of the property and, there-fore, the income derived from the gifted property was an irrelevant consideration. On a reference, at the instance of the revenue. Held, that once the market value of the "property" as defined in Section 2 (xxii) of the Gift Tax Act, 1958, was determined, the computation of tax must be made with…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492