| Case ID |
21278b49-d24d-4a9b-99e3-3e957f32b9a7 |
| Body |
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| Case Number |
D-2741 of 2016 |
| Decision Date |
Mar 31, 1976 |
| Hearing Date |
Jan 24, 1976 |
| Decision |
The Tribunal correctly held that the provisions of section 2(xxiv) of the Gift-tax Act refer to the exercise of powers of appointment. The case involved Anarkali Sarabhai, who exercised her power of appointment granted by trustees, transferring her life interest in a trust corpus to four other trusts that were not beneficiaries under the original trust deed. The Tribunal found that this constituted a transfer of property as per the definition under the Gift-tax Act. Furthermore, it was concluded that the exercise of power occurred on the date of the resolution passed by the trustees, not the date when the benefits flowed from the trust. The decision emphasized that the exercise of appointment powers by Anarkali Sarabhai was valid and constituted a taxable event under the Gift-tax Act, affirming that the GTO was incorrect in levying gift-tax on the entire corpus since only the interest of the assessee was transferred. |
| Summary |
This case revolves around the interpretation of the Gift-tax Act, specifically the definition of 'transfer of property' under section 2(xxiv). Anarkali Sarabhai, a beneficiary of a trust, exercised her power of appointment to transfer her life interest to four trusts that were not originally beneficiaries. The Gujarat High Court upheld the Tribunal's decision that this constituted a transfer of property subject to gift-tax. The ruling clarified that the taxable event was triggered by the exercise of the power of appointment, not the subsequent transfer of corpus. The decision is significant for understanding the implications of trust law and gift taxation, particularly regarding powers of appointment and the treatment of transfers under tax law. Legal practitioners should note the importance of how such powers can affect tax liabilities and the necessity to ensure compliance with tax regulations when dealing with trust assets. |
| Court |
Gujarat High Court
|
| Entities Involved |
Not available
|
| Judges |
M.S. Shah,
D.A. Mehta
|
| Lawyers |
R.K. Patel,
K.C. Patel,
B.B. Nayak,
R.P. Bhatt
|
| Petitioners |
Anarkali Sarabhai
|
| Respondents |
Commissioner of Gift-tax
|
| Citations |
2002 SLD 3038 = (2002) 259 ITR 97
|
| Other Citations |
CGT v. Mrs. Jer Mavis Lubimoff [1978] 114 ITR 90 (Bom.)
|
| Laws Involved |
Gift-tax Act, 1958
|
| Sections |
2(xxiv)
|