1986 (6) TMI 37

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....be assessed in the assessee's hands under section 64 of the Incometax Act and that the act of the assessee in releasing her life interest in the enjoyment of income from the property in question cannot be treated or deemed as a gift so as to attract the application of section 64 of the Income-tax Act? " The assessee, Smt. A. Indiramma, received from B. N. Gupta a gift of property bearing No. 21/1, Jayachamarajendra Road, Bangalore City, under a deed of gift dated March 2, 1955. By the terms of the deed, she was entitled to enjoy the usufruct of that property during her lifetime and thereafter the property would devolve on her children in equal shares. The assessee did not want to have the usufruct of the property throughout her lifetime.....

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.... from the property and, therefore, that income could not be included in her individual assessment. In support of its conclusion, the Tribunal relied upon the decision of the Gujarat High Court in CGT v. Smt. Ansuya Sarabhai (Decd.) [1982] 133 ITR 108. We have perused the terms of the release deed executed by the assessee in favour of her children. She has stated therein that she does not wish to retain any longer her life interest in the property gifted to her by B. N. Gupta. She has also stated that she has released her life interest in the property in favour of her children who were then minors. It was further stated therein that the father and natural guardian of the minors was ready and willing to accept the release deed and the devo....

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.... the assessee that the gift was made bona fide or for extraneous or collateral consideration. In the instant case, there is no finding by the Gift-tax Officer that the release deed was not executed bona fide by the assessee in favour of her children. Therefore, section 4(1)(c) is not attracted to the case and the release deed cannot be considered as a gift deed. In this context, we may also notice the provisions of section 4(1)(e) of the Gift-tax Act which has been inserted by the Finance (No. 2) Act, 1980, with effect from April 1, 1980. The said clause (e) to section 4(1) reads: "(e) Where a person who has an interest in property as a tenant for a term or for life or a remainderman surrenders or relinquishes his interest in the prop....