Abdul hadi, J.
1. At the instance of the Revenue, under s. 26(1) of the GT Act, 1958 (hereinafter referred to as "the Act"), the Tribunal has referred in TC Nos. 361 and 362 of 1984 the following common question of law, for the opinion of this Court for the asst. yrs. 1975-76 and 1976-77 with respect to the respondent-assessee P. D. Kumaresan :
"Whether, on the facts and circumstances of the case, the gifts made by the assessee of the amounts from fixed deposits, which the assessee held outside India, namely, England, together with interest to his daughters in India by directing the manager to mail transfer the proceeds to the donees, were exempt under s. 5(1)(ii) of the Act for the two assessment years under reference ?"
2. Likewise, at the instance of the Revenue, the said Tribunal has referred to this Court the following question in TC Nos. 409 and 410 of 1984 in respect of the same assessment years with reference to the respondent-assessee S. Rajaramalingam :
"Whether, on the facts and in the circumstances of the case, no portion of the gifts made by the assessee during the years is taxable and that the assessee is entitled to exemption under s. 5(1)(ii)(a) of the GT Act for the asst. yrs. 1975-76 and 1976-77?"
3. In TC Nos. 361 and 362 of 1984, the respondent-assessee remains unrepresented and in TC Nos. 409 and 410 of 1984 the respondent-assessee is represented by counsel who vehemently made his submissions elaborately in support of the Tribunal' s order.
4. It is clear that in both the sets of tax case references, the common issue involved is whether exemption under s. 5(1)(ii)(a) of the Act could be granted to the assessees.
In TC Nos. 361 and 362 of 1984, while the GTO rejected the exemption claimed by the assessee, the first appellate authority negatived the exemption for the asst. yr. 1975-76, and granted exemption for the asst. yr. 1976-77. There were, therefore, two appeals to the Tribunal, one by the Revenue and another by the assessee and the Tribunal held that the assessee was entitled to the exemption in respect of both the assessment years.
5. In TC Nos. 409 and 410 of 1984, while the GTO negatived the exemption claimed, the first appellate authority and the Tribunal concurrently granted the exemption claimed in respect of both the assessment years.
6. Learned counsel for the Revenue mainly relies on the order dt. 17th April, 1996 of this Court in TC Nos. 1248 of 1979 [since reported as CGT vs. S. Rajaramalingam relating to the abovesaid assessee Rajaramalingam himself and also the decision in CGT vs. K. A. Abdul Kader relating to some other assessee and submits
that in view of the said decisions, in all these four tax cases, the questions have to be answered in favour of the Revenue. However, learned counsel for the respondent-assessee in TC Nos. 409 and 410 of 1984, despite the similarity of facts between the said TC No. 1248 of 1979 and (supra) on the one hand and TC Nos. 409 and 410 of 1984 on the other hand, sought to make elaborate arguments, contending that the question referred to us should be answered in favour of the assessee, Rajaramalingam.
7. In the above circumstances, we took up initially TC Nos. 409 and 410 of 1984 and heard the arguments of both sides. The assessee in TC Nos. 409 and 410 of 1984, a resident of Salem, was employed as a doctor in the United States of America. In the previous year in relation to the asst. yr. 1975-76, a gift of Rs. 28,000 was made by him in American dollars. In the previous year in relation to the asst. yr. 1976-77, a gift of Rs. 1,43,434 was made. In both the cases, the donor handed over necessary dollars in New York through banking channels. The question that arose was whether these amounts gifted in American dollars by the assessee in the United States of America, but encashed in India by the father of the assessee and handed over to the respective donees were exempt under s. 5(1)(ii)(a) of the Act. The GTO pointed out that similar pointed came up for consideration in relation to the same assessee for the previous asst. yr. 1974-75 and the Tribunal then held that the donor was entitled to exemption under s. 5(1)(ii)(a) of the Act. The said Tribunal's order in relation to asst. yr. 1975-76 was in G. T. A. No. 55 (Mad)/77-78 and G. T. A. No. 58 (Mad)/77-78 dt. 26th April, 1978. It is that order, which was the subject-matter of reference to this Court in the above referred to TC No. 1248 of 1979 and in the above-referred to order dt. 17th April, 1996 in TC No. 1248 of 1979 the facts were shortly follows :
There were three gifts by the same donor-assessee viz.,
(1) to his father, to be given to his brother,
(2) to the father for his own benefit and
(3) to the father to be given to his mother, and in each case, the draft was received and encashed in India and credited to the respective accounts in the books of the father.
8. Admittedly, the assessee Rajaramalingam was not ordinarily resident in India. As per s. 5(1)(ii)(a) of the Act, gift-tax shall not be charged under the Act in respect of gifts made by any person, "of movable property situate outside" the territories to which the Act extends, "unless the person being an individual, is a citizen of India and is ordinarily resident in the said territories." In other words, the above situation, even in relation to the earlier asst. yr. 1974-75, the question that had to be decided was whether at the time of the gifts the subject-matter of the gifts in all the abovereferred to three gifts was outside India (the territories, to which the said Act extended). In the above context, this Court in TC No. 1248 of 1979 has held that where drafts are sent by the donor to the donee on his own by post, the gift undoubtedly would attract liability of gift-tax because in such a case, the post office in USA could be taken to have acted as agent of the donor and the subject matter of the gift would be property situate in India at the time when the gifts were completed and that where the drafts are sent by the donor to the donee at the request of the donee the gifts would be exempted from tax since in such a case, the post office through which the gift was sent, could be taken to have acted as the agent of the donees and the subject-matter of the gift at the time the gifts were completed would be property outside India. So holding, on the facts before it in TC No. 1248 of 1979, this Court observed that there was no material on record to show that any request was made by the donee to the donor for sending gifts. It was also observed that there was no business relationship between the donor and the donees, in which case at least the above said request from the donees, could be implied. Therefore, this Court in the above said TC No. 1248 of 1979 answered the question referred to it in the negative and in favour of the Revenue, holding that the gifts in question were chargeable to tax. The above view was taken in TC No. 1248 of 1979, relying on the above referred to earlier decision in (supra) and other decisions.
9. Before us, learned counsel for the Revenue submits that the decision in TC No. 1248 of 1979 fully covers the present case which only deals with subsequent assessment years in relation to the same assessee and the facts being not in any way materially different. According to him, therefore, the question must be answered likewise in this case also in favour of the Revenue. Further, the said learned counsel also points out that the gifts are complete only when they are accepted by the donees, and till then, it cannot be said that the "transfer" spoken of in s. 2(xii) of the Act (which defines the term "gift"), has been made". So, according to the said learned counsel, if the gifts are to be exempted from tax under s. 5(1)(ii)(a) of the Act, it has only to be seen where actually the movable property in question is situate at the time when the gift is so complete. The said learned counsel submits that though the requirement of acceptance of gift by the donee is spoken to only in s. 122 of the Transfer of Property Act (which defines the term "gift" thereunder) and not s. 2(xii) of the Act, the said acceptance has necessarily to be implied in the definition of the term "gift" under the Act. The said learned counsel also relies on CGT vs. R. Kesavan Nair and the definition of the term
"donee" under s. 2(viii) as a "person who acquires any property under a gift."
10. On the other hand, learned counsel for the assessee relies on Vadulla Venkata Rao vs. CGT where it was held that the acceptance of gift by the donee did not "appear" to be specific requisite condition for a gift under the Act. At the time of the argument, the said learned counsel rather inconsistently argued that even assuming that such acceptance was necessary, the gift should be taken to have been made in the present case at the time when the drafts in question were posted in the United States of America and that therefore, the gifts in question should be exempted. He also argues that post office cannot be the agent of the donor or donee in the present situation and that the Departmental circular referred to in TC No. 1248 of 1979 cannot be of any guidance. In this connection he relies on Union of India vs. Mohd. Nazim also. (In the abovesaid circular, it is mentioned inter alia that where the draft is sent by the donor to the donee in India on his own by post, gift-tax is leviable and that where it is sent by the donor by post to the donee at the request of the donee, gift-tax is not leviable since in the latter case the gift can be said to have been received by the post office only as an agent of the donee outside India). He also seeks to contend that the use of the term "voluntarily" in defining the term "gift" under s. 2(xii) of the Act would show that such request or suggestion by the donee to the donor is not contemplated since according to him, when such request or suggestion is there the "transfer" cannot be said to be 'voluntarily' made as per the said definition. Further, he also argues that taking into account the abovesaid s. 5(1)(ii)(a) r/w s. 2(xii) the intention of the legislature is to exempt such gifts made by a non-resident donor as the assessee.
11. We have considered the rival submissions. We are of the view that the question lies in a very narrow compass despite the lengthy argument of learned counsel for the assessee. Sec. 5(1)(ii) runs as follows :
"(1) Gift-tax shall not be charged under this Act in respect of gifts made by any person -
(i) of immovable property situate outside the territories to which this Act extends;
(ii) of movable property situate outside the said territories unless the person -
(a) being an individual, is a citizen of India and is ordinarily resident in the said territories, or
(b) not being an individual, is resident in the said territories during the previous year in which the gift is made."
Admittedly, the assessee is an individual but does not fall under cl. (ii)(a) above and the properties gifted are movable properties. So, the only question to be decided is where actually those movable properties were situate at the time when the gifts were made. In this regard, it is also clear to us that the movable properties gifted are the above referred to drafts in question sent by the assessee-son in USA to his father in India. From the facts, in the present case, it appears that the gifts were made by the son to the father, in the above manner for being handed over to the respective donees. In such a situation, we have only to see where actually those drafts (subject-matter of gifts) were situate at the time when the gifts were accepted by the said donees. Even in a case where any of the gifts is directly in favour of the father himself, there also, it has only to be seen where actually the draft was, at the time when the father accepted the gift. Looking at from this angle, it is clear to us that the drafts in the present case were only in India at the time when the gifts were accepted by the father or the other donees, as the case may be. We must point out here, that according the definition of the term "gift" under s. 2(xii) of the Act, unless the "transfer" spoken to in the said section has been "made", there cannot be any gift under the Act. In this context, the expression "transfer..... made" appearing in s. 2(xii) of the Act, should only be read as "transfer validly made". So, necessarily where the parties to the gift are governed by s. 122 of the Transfer of Property Act, as in the present case, unless acceptance by the donee of the said proposed transfer, is there, there is no "transfer validly made" and, therefore, there cannot be "gift" under the Act. This view of ours also gets support from the definition of the term "donee" as "any person who acquires any property under a gift". The said term "acquire" connotes that the person concerned should have a positive mental attitude "to gain" or "to get, as one's own". Moreover, under s. 29 of the Act, the donee can be called upon to pay the tax if the AO is of the opinion that the same cannot be recovered from the donor. While so, it does not seem to be that the intention of the legislature was to make a person liable for tax in respect of a transaction which he does not agree to or even repudiates. Further in Goli Eswariah vs. CGT , it was specifically held thus :
"Before an act can be considered as a gift as defined (under the Act) there must be a transfer of property by one person to another".
12. Thus it is evident that there cannot be such transfer of property unless acceptance is there as per s. 122 of the Transfer of Property Act in respect of persons to whom the said s. 122 applies (as in the present case). Further, the use of the expression "transfer" also shows that a gift transaction could only be a bilateral transaction. That is why (supra), in which the question was whether a
Hindu coparcener, throwing his self-acquired property in common stock of undivided family, would give rise to a gift under the Act, the Supreme Court has held that there is no gift in such a case since such throwing of self acquired property or blending is only an unilateral transaction and not bilateral transaction. For the above reasons, we agree with the view expressed in (supra) and are
unable to agree with the halting or casual observation of the Andhra Pradesh High Court in (supra) that "the acceptance of gift by a donee or some one on his behalf does not appear to be a specific requisite condition for a gift under the Act".
13. Learned counsel for the assessee also argues that if the intention of the legislature was to give the same meaning of "gift" as found in s. 122 of the Transfer of Property Act, in the GT Act also, then it would have incorporated the very definition of the term "gift" found in the abovesaid s. 122 in the definition under s. 2(xii) of the Act. But, in our view, there is no merit in this argument also. If the definition found in the abovesaid s. 122 is incorporated in s. 2(xii) of the Act, it may give rise to other problems. For example, the abovesaid s. 122 does not apply to Muslims even as per s. 129 of the Transfer of Property Act. The Muslims are governed by their own personal law, which even require, apart from acceptance by the donee, delivery of possession of the subject-matter of the gift to the donee as one of the essential ingredients for a complete and valid gift under Muslim law. Further, it is well known in the case of gift of immovable property, whose value is above Rs. 100, for the gift to be valid, it should be registered under the Registration Act. So, in such a case, despite the acceptance by the donee, if the gift is not registered, as per s. 17 of the Registration Act, it will not be valid. In this connection, we may also incidentally point out that at one time, learned counsel for the assessee even argued that the gift of immovable property beyond the value of Rs. 100 is complete as soon as it is registered even though there is no acceptance. This argument also is devoid of any merit. In view of these and other reasons, it could be inferred that the legislature in enacting the definition of the term "gift" under s. 2(xii), has deliberately used the expression "transfer..... made". In that light only we have earlier pointed out that the expression "transfer..... made" should be read only as "transfer..... validly made". Incidentally we may also point out that even in Hindu law, certain gifts of joint family properties are not valid. Likewise, there may be prohibition or restriction under the Foreign Exchange Regulation Act for making a gift. Thus, the intention of the legislature under the Act cannot be to levy tax on "inchoate gifts", which do not become complete and valid gifts under the law regulating in the actual transfer of property in the subject matter of the gift to the donee.
14. While so, what is relevant for granting exemption in the present case, under s. 5(1)(ii)(a) of the Act is only to see where actually the movable properties in question, namely, drafts, were situate at the time when the gift was accepted. If really the assessee wanted to claim exemption on the footing that this acceptance took place when the postal authority in USA, as agent of the donee, accepted the drafts for being transmitted to the donee's father, representing himself or the donee, as the case may be, it is for him to have proved the said fact, but there is no such proof in the present case. The burden of proving that the assessee is entitled to the exemption is only on the assessee and the said burden has not been discharged at all by him. So, it only follows that acceptance had taken place only after the drafts came down to India by post and they were received by the assessee's father. So, it is clear that the subject-matter of gift was only in India at the time the gift is complete, that is, at the time when the 'transfer' (pursuant to the proposed gift) was 'made' i.e., when the transfer of property in the subject matter of the gift has taken place.
15. The above referred to has no application to the present facts. There, from India, value payable article was sent to Pakistan by post and considering the relevant provisions of the Post Office Act of India, the Supreme Court held that on the facts before it, the Postal Authority in India cannot be taken as an agent of the sender of the said article. This proposition of law laid down can have no application to the present facts where from outside India, the post has been sent to India. In the present case, we do not know what was the law in the USA regarding the postal authority there, to whom the above referred to drafts were entrusted by the donor-assessee. It is also obvious that this aspect of foreign law is a question of fact, on which, there is no finding by any authority below. In fact there seems to be no attempt even by the assessee to let in any evidence on this aspect.
16. We may also point out that A. J. Gomes vs. CIT
turned on its own facts. There, the AAC factually found that the drafts in question were purchased abroad and posted there and gift was complete when the envelopes were posted in the post box and were beyond the reach of the donor, that the post office was only an agent of the donee, that in the context of the relationship of husband and wife between the donor and donee the remittances as well as the mode of remittances were according to previous understanding between the husband and wife, that the gifts had taken place, of movable property situate outside India and, hence, they were exempt from tax under s. 5(1)(ii) of the Act. This view of the AAC was finally accepted by the Kerala High Court on the facts of the said case. But, in the present case, there is no such factual findings that the remittances were according to the previous understanding between the donor and the donee. In the above said Kerala decision, particularly in the light of the above said previous understanding between the donor and the donee, the gift was found to be complete when the postal envelopes, containing drafts were posted in the foreign country. The relevant observation in the Kerala decision is as follows :
"The AAC found that the remittances as well as mode of the remittances were according to the prior understanding between the husband and wife. This aspect was neither adverted to, nor assailed or departed from, in the order of the Tribunal."
17. We must also point out that the abovereferred to principles regarding the question whether post office is the agent of payer or payee, have been no doubt laid down in many decisions (some of whom have been referred to in (supra) including CIT vs. Patney & Co. and Shri Jagdish Mills Ltd. vs. CIT
and reiterated recently in Prima Realty vs. Union of India (1997) 223 ITR 655 (SC), but the actual verdict or conclusion in each case depended on the application of the same principles to the facts in each of the said cases. To illustrate,
(supra), is a case of the Government of the then existing British India making payment by cheque, of a sum, by post from Delhi to the then existing Princely State of Baroda. The sum involved was given by the said Government during the course of business. In that context it was held thus :
"..... the parties must have intended that the cheques should be sent by post which is the usual and normal agency for transmission of such articles. If that were so, there was imported by necessary implication an implied request by the appellant to send the cheques by post from Delhi thus constituting the post office its agent for the purposes of receiving those payments."
Likewise (1997) 223 ITR 655 (SC) (supra) was a case where the Central Government paid by cheque the sum due pursuant to order under s. 269UD(1) of the IT Act, 1961 by the Appropriate Authority, acquiring property in question, and the question was whether the payment was done in time and whether the payment could be said to be done on the day when the cheque was posted to the addressee (payee) (which was the last date for making such payment as per the above said s. 269UD(1). The relevant observation therein is as follows :
"..... according to the ordinary course of business usage, the only reasonable and proper inference is that the payment of such large amount would be made by cheque issued by the Central Government and unless the payee went to collect the cheque personally, the cheque had to be sent by post to the payee. According to this implied term, it must be assumed that unless the cheque was collected personally by the payee it would be sent by post thereby constituting the post office as the agent of the payee for the purpose of receiving the payment. In the present case, the payees did not indicate the mode of payment to them in spite of a letter received by them to indicate the mode of payment. The appellant did not even choose to reply to that letter. In these circumstances, it was reasonable for the concerned authority to have waited for the cheque to be collected personally by the payee till the last date, i.e., 31st May, 1995, and to have despatched it by post on that day when no one came to collect the cheque personally from the authority. In such a situation, the payment by cheque despatched by post on 31st May, 1995, amounted to tender of the payment to the payee on 31st May, 1995, itself when the cheque was put in the course of transmission through the post so as to be beyond the control of the sender from the time of its despatch by post. This contention has no merit."
(The above referred to contention was that the post office was not agent of the payee).
18. Further, it must also be noted that these decisions and also Rajkumar Mills Ltd. vs. CIT (1976) 103 ITR 92 (Bom) were concerned with the question of post office being agent of whom, whether sender or receiver of the cheques sent by post for the purpose of (simply) then receiving payments. But, in the present case, we are called upon to decide the question of post office being the agent of sender or receiver of drafts for the purpose of acceptance of the "gift" pursuant to which payment was made. Such a case, in our view, would stand on a slightly different footing. Simply receiving payment as agent, may be a rather passive act, not involving any serious application of mind to come to a decision as to whether the act could be undertaken. But, in the case of acceptance of gift as agent involves serious application of mind to come to a decision as to whether acceptance of the gift should be given or not. In this letter case of acceptance of gift, the donee has got the option even to reject a gift either because it is onerous or even otherwise. Such exercise of option cannot be normally expected from a post office, when it acts as the agent of the donee. Therefore, in such a case, the agency on behalf of the donee (payee) cannot be so readily inferred unless the request by the payee is manifested expressly, or, at least clearly and unequivocally, by implication. But, in the present case, there is absolutely no material to make any such inference. Further, the transaction in the present case is also not in the course of any business. In the above context, the assessee has not discharged his burden in this regard in claiming exemption. Therefore, it has to be necessarily held that he cannot claim the exemption.
19. The other argument of learned counsel for the assessee based on the term "voluntarily" used in s. 2(xii) has absolutely no merit. Simply because some suggestion or request emanates from the donee before the gift is made, involuntariness on the part of the donor cannot be attributed.
20. The net result is, we answer the common question of law referred to us in these TC Nos. 409 and 410 of 1984 in the negative and in favour of the Revenue, holding that the assessee is not entitled to exemption under s. 5(1)(ii)(a) of the Act in the abovesaid assessment years. No costs.
21. Now, coming to TC Nos. 361 and 362 of 1984, we have heard the arguments of learned counsel for the Revenue. This is not a case, where the gifts were made by way of drafts. The movable properties in question in these cases are fixed deposits standing in the name of the assessee (who is not ordinarily resident in India) with a bank in England. The assessee has instructed his bank in the said foreign country to transfer the proceeds of fixed deposits on maturity to his daughters in India, and it is found as a fact by the Tribunal that the property in fixed deposits should be considered to have passed from the assessee-donor to the various donees as soon as these instructions are given in England by the assessee to his banker. In the light of the abovesaid finding of the Tribunal, learned counsel for the Revenue could not advance any serious argument contra before us. Further it also appears that most of the gifts in question, if not all, are in favour of minors. So also it can be concluded that even while the donor gave the abovesaid instructions to his bank, he also accepted the said gift on behalf of his minor daughters-donees. Therefore, in these cases, we do not find any infirmity in the order of the Tribunal granting exemption under s. 5(1)(ii)(a) of the Act. Accordingly we answer the question referred to us in the affirmative and against the Revenue. No costs.