SATYA NANO MUNJAL versus COMMISSIONER OF GIFT TAX

Citation: [2013] 1 S.C.R. 492 · Decided: 22-01-2013 · Supreme Court of India · Bench: D.K. JAIN · Disposal: Appeal(s) allowed

Judgment (excerpt)

A 
B 
[2013] 1 S.C.R. 492 
SATYA NANO MUNJAL 
V. 
COMMISSIONER OF GIFT TAX 
(Civil Appeal No. 3914 of 2010) 
JANUARY 22, 2013 
[D.K. JAIN AND MADAN B. LOKUR, JJ.) 
GIFT TAX ACT, 1958: 
c 
s. 4(1) (c) - Gift to include certain transfers - Revocable 
gift of equity shares made by assessee in February 1982, 
finally held to be a valid gift - Bonus shares received by 
transferee as holder of equity shares - Gift revoked in 1988 
within the window period - Re-assessment order seeking to 
0 
tax the assessee treating bonus shares as gift by assessee 
- Upheld by High Court - Held: Since High Court has not 
noticed the provisions of s. 4 (1) (c), matter remanded to it 
for consideration afresh, keeping in view the provisions of s. 
4 (1) (c) as also the assessment order for Assessment year 
E 1982-83. 
On 20.02.1982, the assessee executed a deed of 
revocable transfer of certain fully paid up equity shares 
in favour of the transferee, with a stipulation that the gift 
could be revoked on completion of 74 months but before 
F expiry of 82 months from the date of transfer. In 
September, 1982 and May 1986, the company issued 
certain bonus shares to the transferee as holder of gifted 
equity shares. On 15.06.1988, the assessee revoked the 
gift of equity shares, which came back to the assessee, 
G but the bonus shares continued with the transferee. 
Ultimately, the revocable gift .made by the assessee was 
held valid by the ITAT and the High Court, and assessee 
liable to pay gift tax on the value of the gift in terms of r. 
11 of the Gift Tax Rules, 1958. However, by reassessment 
H 
492 
SATYA NANO MUNJAL v. COMMISSIONER OF GIFT 493 
TAX 
order dated 24.03.1998, it was held that the assessee had 
A 
surrendered his right to get back the bonus shares and 
the same were treated as gift by the assessee to the 
transferee. The assessee was taxed accordingly. The 
reassessment order was ultimately upheld by the High 
Court. Aggrieved, the assessee filed the appeal. 
B 
Allowing the appeals, the Court 
HELD: 1.1. It is quite clear that the assessee had 
made a valid revocable gift of 6000 equity shares on 
20.02.1982 to the transferee. This is a finding of fact C 
conclusively determined by the High Court in the 
assessee's own case.* The only event that took place in 
the previous year relevant to the Assessment Year 1989-
90 was the revocation of the gift by the assessee on 
15.06.1988. The High Court did not even notice the 
D 
provision of s.4(1)(c) of the Act. [Para 24-25] [500-D-E-G] 
* Commissioner of Gift-tax v. Satya Nand Munjal, [2002] 
256 ITR 516 - referred to. 
1.2. In the circumstances, this Court is not inclined 
E 
to decide the issue finally since the High Court has not 
recorded its view on the interpretation of s. 4(1)(c) of the 
Act. Nor has the High Court expressed its view on the 
applicability or otherwise of the principle laid down in Mc 
Dowell & Co. Accordingly, the order of the High Court is 
F 
set aside and the matter is remanded to it for de novo 
consideration, keeping in mind the provisions of s. 4(1)(c) 
of the Act as well as the orders passed in the case of the 
assessee for the Assessment Year 1982-83. [Para 26, 28-
29] [501-A-B, D-E] 
G 
McDowell & Co. v. Commercial Tax Officer [1985] 154 
ITR 148; Escorts Farms (Ramgarh) Ltd. v. Commissioner of 
Income Tax, [1996] 222 ITR 509 - referred to. 
H 
A 
B 
494 
SUPREME COURT REPORTS 
Case Law Reference: 
[1985] 154 ITR 148 
[2002] 256 ITR 516 
[1996] 222 ITR 509 
referred to 
referred to 
referred to 
[2013] 1 S.C.R. 
para 9 
para 10 
para 21 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 
3914 of 2010. 
From the Judgment & Order dated 17.12.2008 of the High 
c Court of Punjab and Haryana at Chandigarh in GTA No. 3 of 
2001. 
D 
WITH 
C.A. Appeal No. 3915 of 2010. 
S. Ganesh, Satyen Sethi, Arta Trana Panda, Rameshwar 
Prasad Goyal for the Appellant. 
R.P. Bhatt, Arijit Prasad, Rahul Kaushik, Chandra Bhushan 
E Prasad, Gargi Khanna, Reena Singh, Anil Katiyar, P.S. Parvar, 
Shaheen Parveen, Yatinder Chaudhary (for B.V. Balaram Das) 
for the Respondent. 
The Judgment of the Court was delivered by 
F 
MADAN B. LOKUR, J. 1. Civil Appeal No. 3914/2010 
(Assessee: Satya Nand Munjal) and Civil Appeal No. 3915/ 
2010 (Assessee: Om Prakash Munjal) arise out of G.T.A. No.3/ 
2001 and G.T.A. No. 2/2001 respectively both decided by the 
High Court of Punjab & Haryana on 17th December, 2008. The 
G 
relev~nt Assessment Year is 1989-90. 
2. At the instance of t

Excerpt shown. Read the full judgment & AI analysis in Lexace.