THE COMMISSIONER OF GIFT-TAX, KERALA versus DR. GEORGE KURUVILLA

Citation: [1971] 1 S.C.R. 373 · Decided: 24-04-1970 · Supreme Court of India · Bench: J.C. SHAH · Disposal: Appeal(s) allowed

Judgment (excerpt)

J 7:! 
A 
THE COMMISSIONER OF GIFr-TAX, KERALA 
B 
c 
E 
f 
G 
H 
v. 
DR. GEORGE KURUVILLA 
April 24, 1970 
[J.C. SHAH, K. S. HEGDE AND A. N. GROVER, JJ.] 
Gift-•ax Act, (18 o/1958) s. 5(1) (tiv)-Gift of Ho.1pitt1/ building h.v 
medical practitioner to his son who later joins donor's 
profession-Gift 
describ;td as for love and affection-Whether exenzp; under s. 5(l)(xiV). 
The assessee-a medical practioner, by a detd gifted a hospital build-
ing and land appurtenent thereto his son. 
The gift-deed recited that the 
gift was made "out of love anci affection··. The asses.set.: clai'lled ex.emp-
tion from gift-tax liability under s. 5 ( 1) (xiv) of the Gift Tax Act 1958 
on the ground that a few months after the gift his son had graduated in 
medicine and had joined "he assessee's 
profession. 
No ·evidence 
was 
placed before the taxing autho•ities that the gi'ft was made io the course of 
carrying on the business of tk douor. 
the Gift-tax Officer rejected the 
claim, and thl! order was affirmed by the Appellate Commissioner. 
The 
Appellate Tribunal held that the assessee was exempt from liability to pay 
Gift-tax. 
On reference, the High Court upheld the Tribunal's order. 
In 
appeal by the Revenue. this Court. 
HELD ; The assessee wa, not entitled to the exemption under s. 5 (I) 
(xiv) of the Act. 
The donor is exempt under s. 5( I )(xiv) from liability 
l
o pay tax only if the gift is in the course of carrying on a business. pro-
ession or \location and is made hona flde for the purpose of such business, 
profe~sion or vocation. 
The clause does not enact that a gift made by a 
person carrying on any business is exempt from tax, nor does it prc-vide 
that a gift is exempt from tax because the -propcrcy is used by the donor. 
Without deciding whether the test of "commercial expedience" is strictly 
appropriate to a claim for eremption under s. 511)(xiv1 of the Gift Tax 
Act-there was no evide:icc on the record in this case to provi: that the 
gift was "in the course oi carryin~ on the business" ol the donor, and 
"for the purpose of the husiness". [375 G-H; 376 Al 
C1v11 .. APPELLATE JURISDICTION: . Civil Appeal No. 764 of 
1967.' 
. 
Appeal from the judgment and order dated April 2, 1965 of the 
Kerala High Court in I.T.R. Case No. 26 of 1964. 
B, Sen, S. K. Aiyar and B. D .. Sharma. for the appellant. 
· The respondent did not appear. 
The Judgment of the Court was delivered by 
Shllh, J. 
By our order dated January 1, 1969, we directed 
the Income-tax Appellate Tribunal to ~ubmit a supplementary 
statement of the case together with a copy of the deed of gift 
dated February 3, 1960 executed by the respondent. The Tri-
L12SupCl/70-to 
374 
SUPREME COURT REPORTS 
(19 71 J 1 S.C.R. 
bunal has submitted the supplementary statement of tle case to-
gether with a copy of the deed of gift exe.cuted by the respondent 
on February 3, 1960. 
The respondent is a medical practitioner. By the deed dated 
February 3, 1960 he has given to his son Thomas four iteos of 
property : ( 1) one-fifth share in cardamom estate valued at Rs. 
3,030.80; (2) 1.38 cents of garden land valued at Rs. 
4,500; 
(3) G. K. Hospital Building erected on the garden land valued 
at Jls. 17,250; and ( 4) Othi rights valued at Rs. 6,000. 
; 
In response to a notice under s. 13 (2) of the GMt Tax Act 
18 of 1958 the 
assessee filed a return for the assessment year 
.1960-61 disclosing taxable gifts of property valued at Rs. 27,251. 
But he claimed exemption in respect of item No. (2), i.e. the 
-garden land. In the course of the hearing the respondent claimed 
that the G.K. Hospital Building item No. (3) was also exempt 
from liability to gift-tax because of s. 5(1) (xiv) of the·Gift-tax 
Act. It was t;,e case of the respondent that his son Thomas had 
graduated 
in the medical science at an examination held 
_in 
December 1959 and had joined the respondent's profession as 
a House-Surgeon in July 1960, and on that account the gifts in 
. respect 
of items ( 2) & ( 3) were exempt from liability to tax. 
The Gift-tax· Officer rejected the .claim. The Appellate Assistant 
Commissioner confirmed tHe order of the Gift-tax Officer. The 
·Appellate Tribunal held that the 
respondent was entitled 
to 
exemption in respect of items (2) and (3). 
At the instance of the Commissioner of Gift Tax, the Tribu-
nal referred the following question to the High Court of Kerala for 
<>pinion: 
· 
"Whether on the facts and in the circumstances of 
the case, the. as~essee 

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