Law:

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Section 5(1)(xiv) of the Gift-tax Act, 1958 - Exemption - Gift in course of business - Assessee claimed exemption from payment of tax in respect of certain properties gifted by him - Tribunal allowed assessee's claim - Copy of gift deed had not been tendered in evidence - Whether question as to liability or otherwise of assessee to pay tax could not be determined by Tribunal without looking at deed of gift - Held, yes - Whether, therefore, Tribunal should submit a supplementary statement of case and annexed therewith deed of gift - Held, yes FACTS The respondent-assessee claimed exemption from payment of gift-tax in respect of certain properties gifted by him in favour of his sons, relying on the provisions of section 5(1), clause (xiv). The Tribunal upheld the claim of the respondent. On reference, an attempt was made before the High Court by the department to tender in evidence a copy of the gift deed but the High Court rejected it and agreed with the Tribunal. On appeal to the Supreme Court: HELD The High Court rightly rejected the department's application, because the High Court could not add to the statement of the case. The High Court proceeded to observe that they were not satisfied that the gift deed formed part of the record. About the correctness of this statement it entertained some doubt. The respondent was claiming the benefit of an exemption from liability to pay tax in respect of a transaction of gift made by him and the burden of proving acts which entitled to him to the exemption lay upon the respondent. It could not be said that the question as to the liability or otherwise of the respondent to pay the tax could be determined by the departmental authorities and the Tribunal without even looking at the deed of gift. It was directed that the Tribunal be called upon to submit a supplementary statement of case and annex therewith the deed of gift, executed by the respondent in favour of the children. After the supplementary statement was received by the Supreme Court, the appeal will be placed for hearing. Note : The case remanded back. JUDGMENT Shah, J.-The respondent claimed exemption from payment of gift-tax in respect of certain properties…

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