Law:

Section:

Section 4 of the Gift-tax Act, 1958 - Deemed gifts - Assessment year 1969-70 - Assessee-company entered into a composite agreement with housing society and one 'G', whereunder reversionary rights of assessee-company in land were purchased by society and in return assessee-company was to withdraw two suits filed against society - One clause of said agreement further required society to waive certain amount payable to it by 'G', who was sister of one of directors of assessee-company - GTO opined that 'G' was got released by assessee-company without any consideration, accordingly, GTO taxed said released amount after allowing statutory deduction - In instant reference, from records, it was apparent that in composite agreement entered into, nowhere it was mentioned that amount payable by 'G' to society was to be deducted from any amount agreed to be paid by society to assessee-company for purchase of reversionary rights - Moreover, in said agreement nowhere assessee-company asked society to waive such amount as assessee-company had not specifically given up any claim or released any debt in favour of 'G' - Whether, in view of abovementioned circumstances, it could be concluded that assessee company was 'Person responsible' for getting debt of 'G' released - Held, no - Whether, moreover, fact that composite agreement was reached with a view to put an end to all disputes between parties as mutually agreed inter se between them, that would by itself constitute a good consideration for effecting release of 'G' - Held, yes - Whether, therefore, Tribunal was right in holding that neither a taxable gift nor a deemed gift under section 4(c) was proved to have been made by assessee-company in favour of 'G' - Held, yes FACTS The co-operative housing society had entered into a compromise agreement with the assessee-company and one 'G' whereunder the reversionary rights of the assessee-company in the land which was leased to the housing society were purchased by the society from the assessee-company and the assessee was to withdraw two suits filed by it against the society. In said agreement, by clause (8), it was further agreed that the society would waive the amounts payable…

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