AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
1987 (2) TMI 133
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.... Rs. (1) Mrs. Jayanthi Balaji 1,600 8,838 (2) Miss Divya Krishnan 3,100 17,124 (3) Mr. Shyam Krishnan 3,100 17,124 (4) Madhumita Balaji 1,700 9,392 (5) Mrs. Lakshmi Durai 1,000 &nb....
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....ion. In the present case, the gift to the 6 donees cannot be disassociated from their obligation to meet the tax liability which otherwise would have been a liability of the donor. In such a case the gift would be without consideration to the extent of the value over and above the liability met by the donee. The present case should be considered as one falling under the second category discussed above. In such a case only the net value after adjusting the consideration flowing back from the donee would constitute the gift. In this view of the matter, I find support in the decision of the Madras High Court in CGT v. Late Sheik Dawood [1983] 139 ITR 261. Having regard to the facts of the case and in the light of that decision, I hold that the Gift-tax Officer is not justified in rejecting the appellant's claim for adjusting the gift-tax liability borne by the donee against the value of the shares. The Gift-tax Officer is directed to adjust the gift-tax liability and bring to tax only the net amount after such adjustment." In the view that he took, he allowed the appeal. 3. The revenue is in appeal before us. The learned departmental representative submitted that the case was fully ....
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.... proceeded against for realising the gift-tax. But that does not mean that the value of the gift can be taken to be the market value less gift-tax, as has been assumed by the Tribunal in this case." It is clear that the High Court has considered whether a liability on the part of the donee to discharge the gift-tax dues of the donor, as stipulated in the deed of gift, would depress the market value of the property and the High Court has pronounced upon the issue and has held that the market value would not be depressed on this score. We consider that the aforesaid decision of the Madras High Court is binding on us as far as this case is concerned and the assessee would not be entitled to the deduction claimed. 6. The learned counsel for the assessee had submitted that the decision of the Calcutta High Court in the case of Biswanath Paul would support the stand of the assessee. That was a case where a father gifted separately to his three sons certain properties subject to payment to the donor by each donee Rs. 20,000 within two years. The Calcutta High Court considered the gifts to be either onerous gifts or having reference to the provisions of section 40 of the Transfer of Prop....
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....nessed and arranging to lodge the same with the Company in due course. Please let me know the amount payable by me in due course towards gift-tax and stamp duty. Yours affectionately, Sd/-- (Lakshmi Durai)" The other replies are in similar terms. The donor has referred to the provisions of section 127 of the Transfer of Property Act and has stated that the gift made was a gift within the meaning of that section. Section 127 of the Transfer of Property Act reads as under: "127. Where a gift is in the form of a single transfer to the same person of several things of which one is, and others are not, burdened by an obligation the donee can take nothing by the gift unless he accepts it fully. Where a gift is in the form of two or more separate and independent transfers to the same person of several things, the donee is at liberty to accept one of them and refuse the others, although the former may be beneficial and the latter onerous. A donee not competent to contract and accepting property burdened by any obligation is not bound by his acceptance. But if after becoming competent to contract and being aware of the obligation, he retains the property given, he becomes so bound." ....