1976 (1) TMI 42 - AT - Income Tax

Appellate Tribunal revises valuation of gifted properties, grants education expense exemption

MRS. SARAMMA VARGHESE. Versus GIFT TAX OFFICER.

The Appellate Tribunal ITAT Cochin revised the valuation of gifted properties, determining the correct classification of lands gifted to four donees, ... - Issues:1. Valuation of gifted properties2. Exemption under s. 5(1)(xii) of the GT ActValuation of gifted properties:The appeal before the Appellate Tribunal ITAT Cochin involved a gift tax appeal by the assessee regarding the valuation of gifted properties. The dispute centered around the classification of lands gifted to four donees, particularly focusing on the rubber area. The GTO and AAC had classified the lands differently, leading to variations in valuation. The Tribunal examined the gift deeds, recitals, and wealth-tax return filed for assessment year 1971-72 to determine the correct classification. It was concluded that the rubber estate gifted to one donee was a pucca rubber plantation, contrary to the classification by the GTO and AAC. For the remaining alleged rubber area gifted to other donees, it was established that it fell under the category of uncultivated area, not immature rubber area as classified by the authorities. Consequently, the Tribunal revised the valuation, considering the lands as yielding rubber area, uncultivated area, and other categories, resulting in a total value of Rs. 98,000 for the gifted properties covered by the four documents.Exemption under s. 5(1)(xii) of the GT Act:The second issue pertained to the exemption under s. 5(1)(xii) of the GT Act for the education expenses of the donee, Benjamin. The gift deed indicated a proposed course of study involving education in India and abroad, including the USA. The GTO estimated the cost for study in India but disregarded the expenses for education abroad due to foreign exchange restrictions. The Tribunal noted that the GTO had not ascertained the proposed course of education or the intentions behind the gift adequately. It was emphasized that the income from the gifted property should not be a determining factor for estimating the amount necessary for education. Considering the bona fide nature of the proposed course of study, the Tribunal allowed an exemption of Rs. 50,000 for education expenses, emphasizing the genuine intentions of the parties involved. The appeal was allowed in part, and the assessment to gift tax was modified accordingly to reflect the exemption granted.In conclusion, the Appellate Tribunal ITAT Cochin addressed the issues of valuation of gifted properties and exemption under s. 5(1)(xii) of the GT Act in a detailed judgment, providing clarity on the classification of lands and the estimation of education expenses for the donee. The Tribunal's analysis focused on the documentary evidence, recitals in the gift deeds, and the genuine intentions of the parties to arrive at a fair and just decision regarding the gift tax appeal.