JUDGMENT
A. R. TIWARI, J. :
Misc. Civil Case No. 41 of 1987 and Misc. Civil Case No. 200 of 1987 cover the reference made by the Tribunal under s. 26(1) of the GT Act, 1958 (for short the Act) at the instance of the assessee. Misc. Civil Case No. 44 of 1989 is in compliance of the directions issued by this Court under s. 26(1) of the Act. As these cases involve the same question about taxability as gift and the share on that basis, the cases are heard analogously and are being disposed of by this common order.
2. In Misc. Civil Case No. 41 of 1987, the undernoted question of law, arising out of the GTA No. 10/Ind/1984 decided on 14th April, 1986 and connectible with RA No. 46/Ind/86 for asst. yr. 1974-75, is submitted for our opinion :
“Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the assessee as per deed dt. 12th Nov., 1973 made a taxable gift within the meaning of the GT Act, 1958 ?”
3. In Misc. Civil Case No. 200 of 1987, the undernoted question of law, arising out of the GTA No. 9/Ind/1984 decided on 4th Dec., 1986 and connectible with RA No. 11/Ind/1987 for asst. yr. 1973-74, is submitted for our opinion :
“Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the assessee as per deed dt. 28th March, 1973 made a taxable gift under the GT Act, 1958 ?”
4. In Misc. Civil Case No. 44 of 1989, the Tribunal with reference to the order dt. 29th June, 1987 passed in GTA No. 3/Ind/1987 and connectible with RA No. 92/Ind/1987 for asst. yr. 1974-75, sent undernoted question of law, as directed by this Court, for our opinion :
“Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the subject matter of gift was 1/4th share in the corpus of the trust property and not in the interest of the assessee as a beneficiary ?”
5. Briefly stated, the facts of the case are that Late E. C. Cowasji declared the trust of his movable and immovable properties by a deed of trust dt. 28th Sept., 1960 making his wife, Mrs. Banoo Cowasji; his son J. H. Cowasji; and his two daughters, Ms. Ketayun Stedman and Ms. Dinoo E. Cowasji as beneficiaries of the said trust. The said trust was initially discretionary and revocable after a period of 7 years. The settlor, Late E. C. Cowasji, thereafter by a deed of renunciation dt. 15th May, 1967 renounced his discretionary right of revocation and made the said trust as irrevocable. He died on 23rd Dec., 1967. Thereafter his widow, the assessee Mrs. Banoo Cowasji by a deed of release dt. 12th Nov., 1973 released her right, title and interest in the trust properties in favour of the other three beneficiaries, namely, her son and two daughters. The GTO treated this release deed as gift within the meaning of cl. (xii) r/w cl. (xxiv) of s. 2 of the GT Act. He accordingly valued 1/4th share of the assessee in the corpus of the trust as also the beneficial interest (life interest) of the assessee in the income of the trust and took the total of two as the value of the gift. The assessee filed the appeal. The CGT(A) held that it was not a gift and, therefore, he declined to decide the value of the gift. The Department then filed the appeal before the Tribunal. The Tribunal held that it was a gift and thus remitted the case back to the GTO to determine the value of the gifted property. On remand, 1/4th share of the assessee in the corpus of the trust was determined. One of the daughters also released her beneficial interest in favour of her children by release deed dt. 28th March, 1973. This was also treated as gift. On application, the Tribunal referred the aforesaid questions for our consideration. The third question, as noted above, was referred in compliance of the directions issued by this Court.
6. We have heard Shri G. M. Chaphekar, learned sr. counsel with Smt. Meena Chaphekar, for the applicant/assessee and Shri D. D. Vyas, learned counsel for the non-applicant/Department, in all these three Misc. Civil Cases.
7. Shri Chaphekar submitted that it was a case of a beneficiary releasing her beneficial interest in the trust and as such it did not fall within the meaning of s. 2 of the aforesaid Act. He, therefore, submitted that CGT(A) was correct in holding that it was not a gift and Tribunal has fallen into error in reversing the order and treating such release as gift. He further submitted that if it is held that the aforesaid release deeds did not amount to gift under the GT Act, then the third question referred in compliance of the directions of this Court will ipso facto vanish because it is evidently consequential in nature. He placed reliance on CGT vs. Mrs. Jer Mavis Lubimoff (1978) 114 ITR 9 (Bom) and CGT vs. Smt. Ansuya Sarabhai (1982) 133 ITR 108 (Guj).
8. Shri Vyas, on the other hand, submitted that it was clearly a gift within the meaning of s. 2(xii) of the aforesaid Act and as such the Tribunal was justified in treating the release deeds as gift under the Act.
9. Sec. 2(xii) of the Act provides as under :
“(xii) “gift” means the transfer by one person to another of any existing movable or immovable property made voluntarily and without consideration in money or moneys worth, and includes the transfer or conversion of any property referred to in s. 4, deemed to be a gift under that section.”
10. Charge of gift-tax and gifts subject to such charge are contained in Chapter-II of the aforesaid Act.
11. The undernoted facts are not in dispute :
(a) The trust was created by Late E. C. Cowasji wherein the assessee is one of the beneficiaries.
(b) Such beneficiary released her beneficial interest in favour of children.
(c) The other beneficiaries also released her beneficial interest in favour of her children.
(d) The beneficial interest was released by the deeds in question.
12. In (1978) 114 ITR 90 (supra), it is held as under :
“Held, that under cl. 2(3) of the trust deed the beneficiary under the power could only be a member of a specified class, namely, child or children of J or her remoter issue. The power that had been conferred by cl. 2(3) of the deed was, therefore, a special power of appointment and the exercise by the assessee of the power of appointment by the deed of poll did not result in a gift. The deed of release or relinquishment was a simple unilateral document executed by J. It did not amount to a “disposition” under cl. (c) or “transaction” under cl. (d) of s. 2(xxiv). It was, therefore, not a “transfer of property” within the meaning of s. 2(xxiv) nor a “gift” within the meaning of s. 2(xii). The Tribunal had given a clear finding of fact that the deed of release had been executed bona fide. Sec. 4(1) (c) did not, therefore, apply. The deed of poll and the document of release did not amount to a gift taxable under the Act.”
15. In (1987) 133 ITR 108 (supra), it is held as under : “Held, that the release deed in question did not effect any gift, bilateral or multilateral, between the parties as contemplated by s. 2(xii) r/w s. 2(xxiv)(d) of the GT Act. Nor was the Revenue able to show by arriving at any positive finding that the transaction was not a bona fide one and hence was a deemed gift within the meaning of s. 4(1)(c) of the Act. The transaction effected by the release deed was not taxable under the GT Act.”
16. The counsel for the Department could not show any provision in the trust deed or in the release deed to show that the aforesaid transactions amounted to gift.
17. Under the Indian Trusts Act, 1882, rights and powers of trustees are shown from ss. 31 to 45, whereas rights and liabilities of the beneficiary are covered by ss. 55 to 69 of the aforesaid Act. Under s. 3 of the Trusts Act, 1882 it is indicated that a “trust” is an obligation annexed to the ownership of property and arising out of a confidence. The person who reposes or declares the confidence is called the “author of the trust”. The person who accepts the confidence is called the “trustee”. The person for whose benefit the confidence is accepted is called the “beneficiary” and the subject matter of the trust is called “trust property” or “trust money”. The beneficial interest or interest of the beneficiary is his right against the trustee.
18. It is thus clear that the aforesaid two beneficiaries possessed the right against the trustee and it is this right which was released.
19. In view of the aforesaid facts and legal position, we answer the questions as under :
(a) As regards Misc. Civil Case No. 41 of 1987, we hold that the release deed. dt. 12th Nov., 1973 in favour of major children as per provisions of trust deeds of 28th Sept., 1960 and 15th May, 1967 is not taxable as a gift within the meaning of GT Act. We, therefore, answer the question in the negative i.e. in favour of the applicant/assessee and against the non-applicant/Department.
(b) As regards Misc. Civil Case No. 200 of 1987, we hold that the Tribunal was not right in law in holding that the assessee as per deed dt. 28th March, 1973 made a taxable gift under the GT Act, 1958. We, therefore, answer the question in the negative i.e. in favour of the applicant/assessee and against the non-applicant/Department.
(c) As regards Misc. Civil Case No. 44 of 1989, we hold that the question of share to the extent of 1/4th becomes irrelevant in face of our answer as noted above. We, therefore, answer the question in the negative i.e. in favour of the applicant/assessee and against the non-applicant/Department.
20. The aforesaid three Misc. Civil Cases are thus decided in terms indicated above but without any order as to costs.
21. Counsel fee for each side in each case is, however, fixed at Rs. 750, if certified.
22. Transmit a copy of this order to the Tribunal in connection with the aforesaid three Misc. Civil Cases for further action, as may be necessary in accordance with law.
23. Retain this order in the record of Misc. Civil Case No. 41 of 1987 and place its copy each in the records of connected Misc. Civil Cases, as particularised above, for ready reference.