Commissioner of Gift Tax vs Madan Lal Jain

Arijit Pasayat, C.J.—At the instance of the revenue, the following question has been referred by the Tribunal, Delhi Bench-D, u/s 26(1) of the Gift-tax Act, 1958 (''the Act'') for opinion of this Court : Whether, on the facts and in the circumstances of the case, the transfer of the assessee''s 13/48 share in Gupta & Co. to Madan Lal Jain & Co. was a gift as defined by the Gift-tax Act or was covered by section 4 of the Act ?

Dispute relates to the assessment year 1969-70.

Factual position in nutshell is as follows :

The assessee, an individual, was partner in two firms, namely, Gupta & Co. and Madan Lal Jain & Co. The gift-tax return was filed by the assessee on 8-7-1969 showing a gift of Rs. 12,200 to his daughter. The assessment was completed on 10-3-1971 and gift-tax return was accepted. Later on, the GTO found that 13/48 share in Gupta & Co. was given to Madan Lal Jain & Co. by a deed of partnership dated 3-4-1968. According to him, this constituted a gift. Since the assessee had not disclosed it, notice u/s 16(1) of the Act was issued. The assessee filed return declaring that there was no gift. The GTO noted that Madan Lal Jain & Co. came into existence on 1-8-1967 whereby Madan Lal Jain, Smt. Suman Jain, Smt. Savita Jain and Smt. Chitra Jain had agreed to carry on business of manufacture of perfumes and synthetic essential oils, etc., and had agreed to share profit and loss in equal proportion. Deed dated 3-4-1968 was executed by the partners of Madan Lal Jain & Co. wherein it was agreed that 13/48 share of Madan Lal Jain in Gupta & Co. shall belong to Madan Lal Jain & Co. Reason given was that because of advanced age assessee could not devote full time and attention and, therefore, the aforesaid Smt. Suman Jain, Smt. Savita Jain and Smt. Chitra Jain were to be allotted the said 13/48 share. As the GTO treated it to be a gift, matter was carried in appeal before the AAC. Said authority held that materials which were used for drawing adverse inference were not brought to the notice of the assessee and, therefore, utilisation of such materials was impermissible. Matter was carried in further appeal before the Tribunal. The Tribunal affirmed the findings of the AAC and rejected the appeal. On being moved for reference, the question as set out above has been referred for opinion of this Court.

We have heard the learned counsel for the revenue. There is no appearance on behalf of the assessee in spite of notice. According to the learned counsel for the revenue, conclusions arrived at by the Tribunal are erroneous. We find that the Tribunal''s conclusions are essentially factual giving rise to no question of law. Therefore, we decline to answer the question referred.

The reference is, accordingly, returned unanswered.