KERALA HIGH COURT

                                          Commissioner of Gift Tax

                                                        Vs.

                                             Dr. George Kuruvilla

                                 Income-tax Referred Case No. 26 of 1964

                               (S. Velu Pillai and V.P. Gopalan Nambiar, JJ.)

                                                   02.04.1965

                                                  JUDGMENT

Gopalan Nambiar, J.

1. Under Section 26(1) of the Gift Tax Act, 18 of 1958, the Income-tax Appellate Tribunal,
Madras Branch has stated the case and referred the following question of law for our decision :

        "Whether on the facts and in the circumstances of the case, the assessee was entitled to
        the exemption in respect of G. K. Hospital and the adjoining land of 1.38 cents under
        Section 5(1)(xiv) of the Gift Tax Act ?"

2. The facts and circumstances of the case on which the above question of law falls to be
answered by us are those : The assessee Dr. George Kuruvilla is a practising doctor. By a deed of
settlement dated 3rd February, 1960, he gifted some of his properties. Among these, the two
items, with which we are concerned, were given away to one of the sons, Thomas Kuruvilla aged
24 years. The donee Thomas Kuruvilla passed his M.B.B.S. examination in December 1959 and
joined his father's profession in July 1960.

3. Section 5(1)(14) of the Gift Tax Act, on the basis of which the question of law falls to be
determined, is as follows :

        "(1) Gift Tax shall not be charged under this Act in respect of gifts made by any person -
        XXXX
        (xiv) in the course of carrying on a business, profession or vocation, to the extent to which
        the gift is proved to the satisfaction of the Gift Tax Officer to have been made bona fide
        for the purpose of such business, profession or vocation.

4. Neither the gift deed nor a copy thereof has been annexed to or forwarded along with the
statement of the case to this Court. The attempt of the counsel for the Revenue to tender a copy
of the gift deed before us has been objected to by the counsel for the assessee. We have declined
to look into the gift deed, as we are not satisfied that the same forms part of the record.

5. The two ingredients to be satisfied in order to attract Section 5(1)(xiv) are : (1) that the gift
deed was made "in the course of carrying on a business, profession or vocation"; and (2) that it
was made "for the purpose of such business, profession or vocation."

6. That the assessee was a doctor by profession and was continuing to exercise the said
profession at the time of the gift is not disputed. On the strength of certain observations at p. 598
of Sampath Iysugar's book on The Three New Taxes, (1959 edition), it is argued by the counsel
for the Revenue that the phrase in the course of" postulates also a connected relation. The
observation appears to have been based on the decision of the Supreme Court in State of
Travencore-Cochin v. Shanmugha Vilas Cashew-nut Factory1, We are not satisfied that the
principle of the said decision rendered in a totally different context and under totally different
circumstances can be applied here. We hold that the first of the ingredients has been satisfied.

7. Was the gift made for the purpose of the business ? is the next question. We feel it difficult to
resist the conclusion that in the background and circumstances, the gift could well be regarded as
having been made for the better ordering of the business of the assessee. It seems to us that it
would be enough to show that the gift was made on ground of commercial expediency and in
order to directly or in directly facilitate the carrying on of the business, profession or vocation.
We do not think that it is further necessary to prove as contended on behalf of the Revenue that
the benefit actually accrued to the business or that the gift was made with a view to earn profits
for the business. We feel that sufficient authority is afforded for our conclusion by the decision in
Binodiram Balchand v. Commissioner of Income-tax, M. P2., and also by the decision of the
Supreme Court in Commissioner of Income-tax, Bombay North v. Chandulal Keshavlal and Co3.,

8. In the result, we answer the question referred on favour of the assessee and against the
Department.

9. A copy of this judgment Under seal of this Court and the signature of the Registrar will be
forwarded to the Appellate Tribunal as required by Section 26(6) of the Gift Tax Act.

10. We make no order as to costs of this reference.

Answer in affirmative.

1 AIR 1953 SC 333       31960-38 ITR 601 : AIR 1960 SC 738

21983-48 ITR 548 at p. 553: (AIR 1963 Madh-Pra 223 at p. 224)