Income Tax Appellate Tribunal - JabalpurGift-Tax Officer vs Smt. L. Bernard. on 26 September, 1984Equivalent citations: [1986]17ITD454(JAB)ORDERPer Shri S. K. Chander, Accountant Member - This appeal by the revenue is directed against the order of the AAC dated 25-9-1982 relating to assessment year 1975-76.2. The assesse, Smt. L. Bernard, had a plot of land admeasuring 11,700 sq. ft. at village Karondi, Jabalpur. She gifted this piece of land on 29-3-1975 to her son who was studying in B. Com. by a registered deed, which itself incorporated a provisions that the gift is for the education of the donee. The son studied B. Com. Part III, LL. B. Parts I and II and cost accountancy. The value of the gifted property was declared at Rs. 20,000. The said plot was sold by the donee on 6-10-1975 for a consideration of Rs. 50,000. Out of the sale proceeds of the land he utilized Rs. 8,882 for payment of income-tax. He also advanced to the donor a sum of Rs. 23,95 for business purposes.3. The return of gift-tax filed on 12-10-1975 declaring nil gift. The GTO on the facts stated above estimated the value of the gifted land on the date of the gift at Rs. 30,000. He also held that the donor never intended that the income of the asset transferred will be for the education purposes of the donee. He also held that the donee had not applied the entire sale proceeds of the assets for his education purposes. He, therefore, held that the claim of the assesse that the gift was covered undersection 5(1) (xii)of the Gift-tax Act, 1958 (the Act) was not admissible and no exemption from the value of the gift determined by the GTO on this account was granted. After allowing the basic exemption undersection 5(2)amounting to Rs. 5,000, the balance of Rs. 25,000 was treated as taxable gift.4. The assessee felt aggrieved and went in appeal before he AAC. The AAC held that the purpose of the gift is stated in the registered deed by which the property has been convey. Therefore, there is no scope to presume otherwise. He, however, estimated the expenses on the education of the donee for four year at Rs. 12,000. Taking the value of the gifted property at Rs. 25,000 the learned AAC allowed the exemption for Rs. 12,000 and held that balance as taxable gift subject to basic exemption. The assessee, thus, got relief of Rs. 17,000. The revenue is aggrieved with this order of the AAC.5. In the appeal of the revenue it is projected that on the facts and in the circumstances of the case, the AAC erred in reducing the value of the gifted land to Rs. 25,000, that he erred in allowing a total reduction of Rs. 17,000 out of the gift assessed to tax. The revenue contended before us further that the very fact that the gift was made should be taken as enough evidence to justify the estimate of the value of the gifted property at Rs. 30,000 as taken by the GTO. It was further contended that the exemption was rightly refused by the GTO because there was no evidence to show that the amounts of the sale proceeds of the gifted land had been utilized for the education of the donee. Therefore, the order of the AAC be reversed and that of the GTO restored in its place.6. On the other hand, the learned counsel for the assessee submitted that it is not for the revenue to go behind the section which gives exemption to the assesse. It was submitted that undersection 5(1) (xii)if the gift is for the education of the assessees children, to the extent to which the gifts are proved to the satisfaction of the GTO as being reasonable having regard to the circumstances of the case, the claim has to be admitted. It was contended that the GTO was not justified to do what he did in view of the judgment of the Kerala High Court in the case of CGT v. P. V. John [1977] 108 ITR 225. It was contended on the merits of the case that the sale of the property fetched high price because during the emergency certain unauthorised shops occupied by the transfer had been ordered to be demolished and they were searching for an alternative site. This was with the donee and it fetched fancy price. Therefore, as on the date of gift the price that the said price of land would have fetched in the market was the same as shown in the registered deed. Therefore, the GTO was not justified in enhancing the value. The order of the AAC, it was argued, is reasonable and fair and calls for no interference at our hands at the instance of the revenue.7. We have given careful consideration to the rival submissions. We have carefully perused the orders of the authorities below along with the judgment cited in support of the case of the assessee. The Honble Kerala High Court has held that in the case of P. V. John (supra) the Tribunal was right in law in holding that the income derived from the gifted property by the assessee was not one of the circumstances to be taken note of in determining what would be the reasonable amount of gift for the purpose of education of the donees undersection 5(1) (xii). In the said case the Appellate Tribunal had 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, therefore, the income derived from the gifted property was an irrelevant consideration. This judgment of the Tribunal was upheld by the High Court.8. In the case before us, in our considered opinion, the value of the gifted property was reasonably determined by the AAC at Rs. 25,000 on the facts and in the circumstances of the case. This value itself was more than by Rs. 5,000 of the value declared in the gift-deed. Since the corpus of the property was being taxed, the income derived from the gifted property was an irrelevant consideration on the basis of which the exemption was denied to the assessee by the GTO. Therefore, the AAC rightly held that the claim of the assessee undersection 5(1) (xii)was admissible. He has also estimated the cost of the education of the donee at reasonable amount. Therefore, we confirm his order and reject the appeal of the revenue.