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Section 4(2) of the Gift-tax Act, 1958 - Deemed gift - Whether section 4(2) inserted with effect from 1-4-1972 will apply to all transactions made during previous year, corresponding to assessment year 1972-73 - Held, yes Facts During the assessment year 1972-73, the assessee was a partner in a firm. On 31-3-1972 he had thrown his share capital in the firm in the hotchpotch of the joint family. The GTO held that the blending of the share capital amounted to a gift within the meaning of section 4(2). The Tribunal upheld the GTO's view. On reference the assessee contended that on 31-3-1972, when the assessee blended his share capital in the common hotch potch, the Amending Act [Finance (No. 2) Act, 1971] had not come into force and, therefore, the transfer of his share capital did not amount to making of a gift. Held The provisions of Finance ( No. 2) Act, 1971 were enforced with effect from 1-4-1972 but it purported to give effect to the financial proposals of the Central Government for the financial year 1971-72. Under section 3, gift-tax is charged in every 'assessment year' in respect of the gift made in the previous year commencing on and from the 1st April of that year. When certain provision is made applicable to certain assessment year, it automatically means that it has applied to the events of the previous year and no further enactment is necessary for that purpose. In the instant case, 1-4-1972 being the relevant date when the amending provisions had come into force, on the face of it for the previous year which ended on 31-3-1972 the transaction of blending by the petitioner of his share capital become eligible to gift-tax. The Tribunal was, therefore, justified in holding that the impugned transaction was hit by the provisions of section 4(2). Cases referred to Salam Abood v. GTO AIR 1970 AP 381, CIT v. Isthmian Steamship Lines [1951] 20 ITR 572 (SC), Karimtharuvi Tea Estate Ltd. v.Slate of Kerala [1966] 60 ITR 262 (SC) and Reliance Jute & Industries Ltd. v. CIT [1979] 120 ITR 921 (SC). B.Kr. Mahanti for the Applicant. S.C. Roy for the Respondent. JUDGMENT Agrawal, CJ. - The Tribunal, Cuttack Bench, has stated a case under section 26(3) of the…

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