P.K. Palwankar vs Commissioner of Gift Tax

This is an application u/s 26(3)(a) of the Gift-tax Act, 1958, for directing the Tribunal to refer a question of law to this court.

The facts, briefly stated, are that the assessee made a gift on 1st of February, 1965, in favour of his son of half portion of a house. The purpose of the gift, as mentioned in the gift deed, is for providing education to the donee. The portion of the house gifted was valued in the gift deed at Rs. 35,000. Before the GTO, the assessee claimed exemption u/s 5(1)(xii) of the Act. He claimed that, as the gift was for providing education to his child and as the gift was reasonable having regard to the circumstances of the case, it was exempt under the said provision. By order dated 25th March, 1971, the GTO assessed the gift to gift-tax. There was an appeal against that order which was allowed by the AAC and the assessee was granted exemption u/s 5(1)(xii). In further appeal to the Tribunal by the CGT, the order of the AAC was set aside and the order passed by the GTO was restored. The view taken by the Tribunal was that the assessment made by the GTO was an agreed assessment and was not open to appeal to the AAC. The assessee, thereafter, made an application before the Tribunal for referring certain question of law. The Tribunal refused to refer any question on the ground that the question whether the assessment order passed by the GTO was an agreed order of assessment was a question of fact.

We have seen the order of assessment passed by the GTO. The order does not expressly state that the assessee withdrew his claim for exemption u/s 5(1)(xii). All that is stated in express terms therein is that the assessee agreed to the valuation of the gift at Rs. 40,500. The Tribunal has also referred to a letter of the assessee which he wrote to the GTO on 19th of September, 1970. In that letter also there is no express statement by the assessee that in case the gift was valued at Rs. 40,500 he would not claim the exemption u/s 5(1)(xii). Having regard to the facts and circumstances of the case, we are of the opinion that the following question of law arises :

"Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the assessee had given up his claim for exemption u/s 5(1)(xii) of the Gift-tax Act, 1958, before the Gift-tax Officer ?"

We direct the Tribunal to state a case and refer the aforesaid question for the opinion of this court. There shall be no order as to costs.