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PETITIONER: COMMISSIONER OF GIFT TAX.  KERALA

       Vs.

RESPONDENT: GHEEVARGHESE.  TRAVANCORE TIMBERS &PRODUCTS, KOTTAYAM

DATE OF JUDGMENT20/09/1971

BENCH: GROVER, A.N. BENCH: GROVER, A.N. HEGDE, K.S.

CITATION:  1972 AIR   23            1972 SCR  (1) 817

ACT: business-Proprietor’s daughters taken as partners-All assets of proprietary business transferred to partnership business- Daughters’  contribution of capital effected by transfer  of money  from father’s account to daughters’  accounts-Whether share  of goodwill of proprietary firm also thereby  gifted- Gifted amounts whether exempt under s. 5 (1) (xiv)-Tests for exemption-"In the course of business and "for the purpose of the business’, meaning of.

HEADNOTE: The assessee was the sole proprietor of a business in timber and timber products.  He converted the proprietary  business into   a  partnership  business  by  means  of  a  deed   of partnership dated August 1, 1963.  The partnership consisted of  the assessee and his two daughters.  The capital of  the partnership   was   to  be  Rs.  4,00-000.    The   assessee contributed Rs. 3,50,000 and each of his two daughters,  one married and the other unmarried contributed Rs. 25,000.  The contribution of the capital by the daughters was effected by transfer  of Rs. 25,000 from the assessee’s account  to  the account  of  each of the daughters.  All the assets  of  the proprietary  business were transferred to  the  partnership. In these assets the assessee and his daughters were entitled to shares in the proportion of their share capital i.e.  the assessee  was  entitled  to  a 7/8 share  and  each  of  his daughters  to  1/16 share.  The profits and  losses  of  the partnership  business  were to be divided  in  equal  shares between  all  the  three partners.   The  assessee  was  the managing  partner of the firm.  The assessee filed a  return of  gift tax for the assessment year 1964-65 in  respect  of the   gift  of  Rs.  50,000  in  favour  of  his   daughters representing the share capital contributed by his daughters. The Gift Tax Officer however took the view that in  addition to the gift of the aforesaid amount the assessee had  gifted 1/3rd portion of the goodwill of his proprietary business to each of his daughters.  Accordingly he added a sum equal  to 2/3rd of the goodwill as estimated by him to the gift of Rs. 50,000  admitted by the assessee.  The  Appellate  Assistant Commissioner dismissed the assessee’s appeal.  The Appellate Tribunal  held that only 1/8 of the goodwill was  gifted  to each of the daughters but the gift was exempt under s. 5 (1) (xiv) of the Gift Tax Act.  The High Court in reference held

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in favour of the assessee.  In appeal by special leave, HELD : The goodwill was a part of the assets which had  been transferred  to  the  partnership.   Under  s.  14  of   the Partnership  Act,  subject  to  the  contract  between   the partners the property of the firm includes all property  and rights and interests in property originally brought into the stock of the firm or acquired by purchase or otherwise by or for the firm and includes also the goodwill of the business. The  departmental  authorities  in the  present  case  never treated as all the assets and property of the assessee which were  transferred to the partnership pertaining to his  pro- prietary  business as a gift nor was it suggested  that  the property and assets valued at Rs. 4,00,000 were the  subject matter  of  the  gift.  The  departmental  authorities  only picked up one of the assets of the assessee’s L3Sup. C.I./72 818 proprietary  business namely its goodwill and regarded  that as  the subject of gift having been made to  the  daughters. There was no justification, for this approach.   Accordingly no  gift tax was payable by the assessee on the goodwill  of the assessee’s business. [823A-D] (ii)To be exempt under s. 5(1)(xiv) a gift should be proved to  have been made not only in the course of carrying &  the business, profession or vocation but also for the purpose of such  business, profession or vocation.  The expression  ’in the  course of carrying on of business etc.’ means that  the gift  should have some relationship with the carrying on  of the  business.   If a donor makes a gift only  while  he  is running the business that may not be sufficient to bring the gift  within the first part of el. (xiv) of s. 5(1)  of  the Act.   It  must  further be established to  bring  the  gift within that provision, that there was some integral  connec- tion  or  relation between the making of the  gift  and  the carrying  on  of  the business.  The  meaning  of  the  word ’purpose’ is that which one sets before himself as an object to  be  obtained; the end or aim to be kept in view  in  any plan,  measures, exertion or operation,  design,  intention. Therefore  on  the plain meaning of the  word  ’purpose’  as employed  in el. (xiv) the Object, plan or design must  have connection or relationship with the business. [824 A-G] In   the  present  case,  considering  the  terms   of   the partnership dead there was no cogent material to come to the conclusion  that  the  gift of Rs. 25,000  to  each  of  the daughters  by the assessee was in the course of carrying  on the business of the assessee and was for the purpose of  the business.   The real object of the assessee was  to  benefit the daughters for the natural reason that the father  wanted to  look to the advancement of his  daughters.   Accordingly the assessee who had himself shown the amount of Rs.  50,000 in his return of gift tax could not claim exemption for that amount under s. 5 (7) (xiv). [826 C-G] State of Travancore Cochin & Ors. v. Chanmugha Vilas  Cashew Nut  Factory  & Ors. [1954] S.C.R. 53, B. W. Noble  Ltd.  v. Mitchell  11  T.C. 372, Morgan v. Tate & Lyle Ltd.  35  T.C. 367,  378,  C.I.T., West Bengal T. Birla Cotton  Spinning  & Weaving Mills Ltd. dt. 17-8-71 and Commissioner of Gift  Tax v. Dr. Grorge Kuruvilla, 77 I.T.R. 746, applied. Commissioner  of Gift Tax, Kerala v. Dr. George   Kuruvilla, (1965) K.L.R. 721, referred to.

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2293 of 1968.

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Appeal  by special leave from the judgment and  order  dated (October  9,  1967 of the Kerala High  Court  in  Income-tax Reference No. 64 of 1966. O.P.  Malhotra, R. N. Sachthey and B. D. Sharma, for  the appellant. S.T.  Desai,  A. K. Verma and J. B. Dadachanji,  for  the respondent. The Judgment of the Court was delivered by Grover,  J.  This  is  an appeal by  special  leave  from  a judgment of the Kerala High Court in a reference made  under S.  26 (1 ) of the Gift Tax Act, 1958, hereinafter  referred to  as the "Act", relating to the assessment  year  1964-65. The assessee was the sole 819 proprietor  of the business run under the name and style  of Travancore  Timbers and Products at Kottayam.  He  converted the  proprietary  business into a  partnership  business  by means  of a deed of partnership dated August 1,  1963.   The partnership consisted of the assessee and his two daughters. The  capital  of the partnership was to be  Rs.  4,00,000/-. The  assessee contributed Rs. 3,50,000/and each of  his  two daughters, one of whom was married and the other  unmarried, contributed  Rs. 25,000/-.  The contribution of the  capital by the daughters was effected by transfer of Rs  25,000/from the  assessee’s  account  to  the account  of  each  of  the daughters.  All the assets of the proprietary business  were transferred  to  the  partnership.   In  these  assets   the assessee  and  his  daughters were  entitled  to  shares  in proportion  to  their  share capital.  In  other  words  the assessee  was  entitled  to  a 7/8 share  and  each  of  his daughters  to  1/16 share.  The profits and  losses  of  the partnership, business, however, were to be divided in  equal shares between all the three partners.  The assessee was the managing  partner of the firm.  The assessee filed a  return of  gift tax for the assessment year 1964-65 in  respect  of the  gift  of  Rs.  50,000/-  in  favour  of  his  daughters representing the share capital contributed by his daughters. The  Gift  Tax  Officer,  however, took  the  view  that  in addition  to the gift of the aforesaid amount  the  assessee had gifted 1/3rd portion of the goodwill of his  proprietary business  to  each of his daughters.  On the  basis  of  the profits of the earlier years the Gift Tax Officer determined the value of the goodwill at Rs. 1,61,865/- and the value of the  2/3rd share of the goodwill gifted to the daughters  at Rs. 1,07,910/- which was added to the amount of Rs. 50,000/- and  the  gift tax was assessed accordingly.   The  assessee preferred an appeal to the Appellate Assistant  Commissioner of Gift Tax which was dismissed.  The Appellate Tribunal  on appeal   held  (i)  the  goodwill  constituted  an   exiting immovable  property  at  the time of-the  admission  of  the assessee’s  daughters into the business; (ii) the  gift  was exempt  under s. 5 (i) (xiv) of the Act as the assessee  was actually  carrying on the business when he admitted his  two daughters into it, the main intention of the assessee  being to  ensure  continuity of the business and  to  prevent  its extinction  on  his  death.   Such  a  purpose  amounted  to business expediency and therefore all the conditions of s. 5 (1)  (xiv) were satisfied; (iii) the goodwill was a  capital asset and the assessee’s daughters had only 1/8 share in the assets  of  the business.  The gift or  the  goodwill  were, therefore,  only of 1/8 share.  The following  questions  of law  were  referred by the Tribunal at the instance  of  the Commissioner of Gift Tax :               (i)   "Whether   on  the  facts  and  in   the               circumstances of the case, the goodwill of the

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             assessee’s  business is an  existing  property               within  the meaning of s. 2 (xii) of the  Gift tax A ct ?               820               (ii)Whether   on  the  facts  and   in   the               circumstances of the case, the assessee gifted               only  a  1/8th share in the  goodwill  of  the               business  to his two daughters or  whether  he               gifted a 2/3rd share ?               (iii)Whether   on  the  facts  and   in   the               circumstances of the case, the gift was exempt               from  assessment under S. 5 (1) (xiv)  of  the               Gift tax Act ?" The  High Court answered all the questions in favour of  the assessee and against the Revenue. It  is essential to look at the deed of partnership  closely because  certain clauses which, have a material  bearing  do not  appear  to have received the attention  either  of  the Appellate Tribunal or the High Court.  It was recited, inter alia, that the assessee was desirous of introducing into the business  of  Travancore  Timbers  and  Products  his  major daughters  and  also  his minor children as  and  when  they attained majority.  It was next stated that upon the  treaty for the introduction of the said partners into the  business for  the par’ and  for the  partnership it was  agreed  that the  first  partner  (assessee)  would gift  a  sum  of  Rs. 25,000/-  to each of his two major daughters.  The  property of  the  business  was next described.   It  was  stated  to consist  of  the land and buildings,  plant,  fixtures.  and machinery,  book debts, benefits of existing contracts  etc. and  stock-in-trade and other movable chattels and  effects. The assessee as beneficial owner conveyed and assigned  unto the   partners  including  himself  all   these   properties including  the  good-Will of the marks and  all  rights  and privileges   belonging  thereto.   Each  of   the   partners covenanted that he or she will duly pay discharge or perform all the debts and liabilities, contracts and engagements  of the  individual business of the assessee subsisting  in  the shares  and  proportions in which they  respectively  became entitled under the business.  It was expressly stated in the first  schedule  which contained the terms,  conditions  and stipulations that the partnership was to be at will.  Clause (2) in the schedule is of particular importance.   According to  clause  2 (a) if the partners or partner  who,  for  the first  time, represented or possesses the major part in  the value of the capital of the business desired to continue the business  with additional partners they, he or she would  be at  liberty to do so on giving 6 months’ previous notice  to the  other  partner or partners paying to  the  partners  or partner  not desiring to continue the value of their his  or her  shares or share and interest in the business,  property and  the  goodwill  and giving a bond  of  "indemnity"  with regard  to  the  mode of ascertaining  such  value  and  the payment  thereof and the amount of the penalty of such  bond and otherwise as if the partnership had under these presents been stipulated to continue after the 31st day of March 821 1964 and such other partners or partner had happened to  die immediately  after the last mentioned day.  It  was  further provided  that if the 31st day of March 1964 passed  without the then partners or partner who possessed the major part in the  value of the capital having given the aforesaid  notice then  the  partners  or partner who,  for  the  first  time, represented  or  possessed a minor part in value  not  being less  than two equal third parts of the capital would be  at

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liberty  to  continue the business by  giving  six  calendar months’ previous notice of their, his or her desire to do so and  paying  to  the partners or  partner  not  desiring  to continue the value of their, his or her shares or share  and interest for the time being of the business and the property and  goodwill  thereof  etc.   If  the  partnership  was  to continue under either of the eventualities mentioned. before every  partner  for the time being who desired  to  continue would have the right to do so.  Clause 7 laid down that  the parties shall be entitled to the capital and property of the partnership  for  the time being in the following  shares  : "The  said first partner Ghee Varghese shall be entitled  to 7/8th  share thereof and each. of second and third  partners to  1/ 16th part thereof".  Clause 8 (a), and Clause  9  are reproduced below :               8 (a) "The capital of the partnership shalt be               the  sum of Rs. 4,00,000/- (Rupees Four  lakhs               only) being the value ascertained as aforesaid               of  the  property of the  said  late  business               taken  over by the said parties hereto and  of               such  further  capital as shall  be  hereafter               contributed  by  the  partners  and  all  such               further  capital shall whether the same  shall               be contributed out of the profits or otherwise               be  contributed by the partners for  the  time               being in the shares in which they are for  the               time being entitled to the existing capital of               the partnership."               9."The  net  profits  or  losses  of   the               partnership shall subject to the provisions of               these presents belong to the partners for  the               time being in equal shares." Under clause 10 the assessee was to be the managing  partner of the firm.  He alone had the power to sign the cheques  on account of the partnership in the, name of the firm.  He had the power to borrow from Banks and other  private  parties for  the  purpose  of the business  and  to  execute  bands, documents  agreements  and  other  activities  as  might  be necessary.   There were other provisions also  which  showed that  it  was the assessee who  retained  substantially  the control  of  the running of the business in his  own  hands. Clause  17 provided that whenever any of the  partners  died during   the  continuance  of  the  partnership   then   the partnership  would  not be dissolved between  the  surviving partners  and elaborate provisions were made with regard  to what would pass to 822 the,  representatives of such deceased partner from  out  of the  properties  and assets of the partnership as  also  its profits.   The  partnership deed also  contained  what  were called  special  provisions  as to the share  of  the  first partner.   Clause 18 provided that the assessee who was  the first  partner could nominate either one or all of  the  his minor  children  to  be  a  partner  or  partners  on  their attaining majority.  Such nomination or appointment could be made by a will or codicil. It  is somewhat surprising that the Gift Tax Officer  picked up  the assets of the business of the assessee, namely,  the goodwill  for treating that as a gift apart from the  amount of  Rs.  50,000/- which had admittedly been  gifted  to  the daughters.  It was mentioned in the assessment order that as the assessee had failed to disclose the gift relating to the same action under S. 17(1) (c) was being taken.  Before  the Appellate  Assistant  Commissioner it  was  contended  inter alia, that the value of the goodwill should not be  included

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as a part of the gift.  Alternatively it was contended  that the  value had been calculated correctly.  This  was apart from  the  other  contentions  which  were  raised  claiming exemption  under  S.  5  (1 ) (xiv)  of  the  Act.   Without examining  the  contentions that the value of  the  goodwill should  not be included as a part of the gift the  Appellate Assistant  Commissioner examined the other  contentions  and agreed with the view taken by the Gift Tax Officer. The  way the Tribunal examined the question relating to  the goodwill  was  by  treating it as an asset  which  had  been gifted  by the assessee to his two daughters.  This is  what the Tribunal observed :               "By  admitting his two daughters, as  partners               of  the business, the assessee also  admitted               them  to  the  benefit  arising  out  of   the               goodwill of the business". Now  it  is  quite  clear that  according  to  the  deed  of partnership  and even otherwise on admitted  facts  goodwill was  a  part of the properties and assets  of  the  business which the assessee was running under the style of Travancore Timber & Products at Kottayam.  All these were valued at Rs. 4,00,000/-.    The   entire  property  of   the   assessee’s proprietary business was transferred to the new partnership. According  to  clause 7 in the schedule to  the  partnership deed  the  parties were to be entitled to the  capital  ’and property of the partnership in the following shares : Assessee                                   7/8th share. each daughter                                1/16 share 823 These  shares were proportionate ’to the capital with  which the partnership was stated to have been started. out of  Rs. 4,00,000/the,  assessee was deemed to have  contributed  Rs. 3,50,000  and  each  of the  daughters  Rs.  25,000/-.   The goodwill, as stated earlier, was a part of the assets which had been transferred to the partnership.  Under s. 14 of the Indian  Partnership  Act  subject to  contract  between  the partners, the property of the firm includes all property and rights and interests in property originally brought into the stock of the firm or acquired by purchase or otherwise by or for  the  firm and includes also goodwill of  the  business. The  departmental  authorities, in the present  case,  never treated  all the assets and property of the  assessee  which were  transferred  to  the  partnership  pertaining  to  his proprietary  business as a gift nor has any suggestion  been made  before us on behalf of the Revenue that  the  property and assets valued at Rs. 4,00,000/- were the subject, matter of  gift.   All that the departmental authorities  did  and. that  position continued throughout was that they picked  up one  of the assets of the assessee’s  proprietary  business, namely,  its  goodwill and regarded that as the  subject  of gift having ’been made to the daughters, who were the  other partners of the firm which came into existence by virtue  of the   deed   of  partnership.   This  approach   is   wholly incomprehensible  and no attempt has been made before us  to justify  it.  In our opinion the second question  which  was referred by the Tribunal should have been framed as follows               "Whether on the facts and in the circumstances               any  gift tax was payable on the  goodwill  of               the assessee’s business.  If the answer be  in               the affirmative how much share in the goodwill               was liable to such tax" ? We  reframe  the question in the above terms.  It  is  quite obvious  that the answer to the first part of  the  question has  to  be  in  the negative  and  therefore  there  is  no necessity  of  answering ,he second part  of  the  question.

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Question  No.  1  also  does  not  arise  and  need  not  be ’answered. We may next deal with the third question.  Section 5 of the Act  gives the exemption in respect of certain gifts.   Sub- clause (xiv)of sub-s. (1) is as follows               5  (1)  "Gift tax shall not be  charged  under               this Act in               respect of gifts made by any person-               (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". 824 The  critical  words  are "in the course of"  and  "for  the purpose".  Therefore the gift should be proved to have  been made  not only "in the course of carrying on  the  business, profession  or vocation" but also bona fide for the  purpose of such business, profession or vocation.  The words "in the course  of"  were  considered  by this  Court  in  State  of Travancore  Cochin  & Others v. Shanmugha Vilas  Cashew  Nut Factory & Others(1) in connection with the language employed in  Art. 286 of the Constitution.  It was pointed  out  that the  word "course" etymologically denotes movement from  one point  to another and the expression "in the course of"  not only  implies a period of time during which the movement  is in progress but also postulates a connected relation.  There clause 1(b) of the Article was under consideration and  what was  exempted under the clause was the sale or  purchase  of the  goods taking place in the course of the import  of  the goods  into or export of the goods out of the  territory  of India.   The  only assistance which can be  derived  in  the present  case  is  the emphasis  on  there  being  connected relation  between the activities for which these  words  are used.  Thus the expression "in the course of carrying on  of business  etc."  means  that  the  gift  should  have   some relationship  with  the carrying on of the business.   If  a donor  makes  a gift only while he is running  the  business that  may  not be sufficient to bring the  gift  within  the first  part of clause (xiv) of S. 5(1) of the Act.  it  must further be established, to bring the gift within that provi- sion,  that there was some integral connection  or  relation between  the making of the gift and the carrying on  of  the business. Under  clause  (xiv) of S. 5 (1) the second  requirement  is that  the  gift  should have been made  bona  fide  for  the purpose  of such business etc.  According to the meaning  of the   word   ’-purpose"  in  Webster’s   New   International Dictionary,  it is that which one sets before himself as  an object to be attained; the end or aim to be kept in view  in any plan, measure, exertion or operation; design  intention. Therefore  on  the plain meaning of the  word  "purpose"  as employed  in  clause (xiv) the object, plan or  design  must have  connection or relationship with the business.  To  put it  differently the object in making the gift or the  design or  intention behind it should be related to  the  business. Some assistance may be derived from the language used in  S. 19  (2) (xv) of the Income tax Act 1922.  According to  that provision  any expenditure laid out or expended  wholly  and exclusively  for  the  purpose of  business,  profession  or vocation  is a permissible deduction in the  computation  of profits.   In B W. Noble Ltd. v. Mitchell(2) a sum had  been paid to a retiring Director in very peculiar  circumstances.

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The object of making the payment was that of preserving  the status  and  reputation of the company which  the  Directors felt would be (2)  11 T.C. 372. (1) [1954] S.C.R. 53. 825 imperilled  either  by the other Director remaining  in  the business  or  by a  dismissal  of  him  against  his  will involving  proceedings  by way of action in which  the  good name  of the company might suffer.  Sargant L.J. was of  the view  that preservation of the status and  dividend  earning power of the company was well within the ordinary purpose of the  trade, profession or vocation of the  company.   Indeed the English courts have refrained from adopting any dogmatic or  set line for discovering the meaning of  the  expression "for  the purpose of" when used in connection with trade  or business because it is essentially a matter which depends on the various sets of circumstances and facts of a  particular case  for determining whether certain expenditure  has  been incurred  for  the purpose of the trade or business  :  (See Morgan  v.  Tate  & Lyle, Ltd.(1).  According  to  a  recent decision of this court in Civil Appeals Nos. 1351-1353, 1897 & 1241 of 1968 (The Commissioner of Income tax, West  Bengal v. Birla Cotton Spinning & Weaving Mill,,; Ltd. etc. (2) the expression "for the purpose of the business" is  essentially wider  than  the  expression "for  the  purpose  of  earning profits".  It covers not only the running of the business or its administration but also measures for the preservation of the business, protection of its assets and property.  It may legitimately  comprehend many other acts incidental  to  the carrying  on of the business.  Another test that  has  often ’been  taken into consideration is whether  the  expenditure was necessitated or justified by commercial expediency. The High Court, in the present case, relied on  Commissioner of Gift Tax, Kerala v. Dr. George Kuruvilla (3) . There  the assessee was a doctor by profession at the time of the  gift which  lie  made in favour of his son who  also  joined  his father’s  profession.  The Kerala High Court took  the  view that the gift had been made in the course of carrying on  of the business,    profession a or vocation within the meaning of s. 5 ( 1 ) (xiv) of  the Act and also for the purpose  of such  business, profession or vocation.  That  decision  was reversed  by This court in Commissioner of Gift Tax v.  Di-. George  Kuruvilla (4)  It has been observed that s. 5 ( 1  ) (xiv)  of  the Act does not indicate that a gift made  by  a person carrying on any business is exempt from tax nor  does it  provide that a gift is exempt from tax  merely  because the  property is used for the purpose for which it was  used by  the  donor.   Without  deciding  whether  the  test   of "commercial  expediency"  was strictly  appropriate  to  the claim for exemption under the aforesaid provision this court held  that there was, no evidence to prove that the gift  to the donee in that case was "in the course of carrying on the business"  of  the  donor  and  "for  the  purpose  of   the business". (1)  35 T.C. 367, 378. (2)  Decided on 17-8-1971. (3)  (1965) K.L.T. 721. (4)  77 I.T.R. 746. 826 We  are satisfied that in the present case also it  has  not been established that the requirements of S. 5 (1) (xiv)  of the Act were satisfied.  The assessee was certainly carrying on  his business at the point of time when he  admitted  his two  daughters into the firm.  But from that fact  alone  it

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did not follow that the gift had been made in the course  of the  assessee’s business nor could it be held that the  gift was  made  for  the purpose of carrying  on  the  assessee’s business.   The  Tribunal came to the  conclusion  that  the partnership   did  provide  for  the continuance  of   the partnership  business in spite of the death of  the  partner and  that the main intention of the assessee was  to  ensure the continuity of the business and to prevent its extinction on  his  death.  A true and correct reading of the  deed  of partnership  indicates that the partners could go  cut  from the partnership in terms of clause 2 of the schedule in  the deed of partnership.  Moreover the partnership was expressly stated  to be at will.  The real intention of  the  assessee apparently was to take his daughters into the firm with  the object of conferring benefit on them for the natural  reason that  the father wanted to, look to the advancement  of  his daughters.   It was further provided in the deed  that  even the  minor  children would, in due course,  be  admitted  to partnership.   Clause 8 of the schedule already referred  to laid down that the assessee could nominate either one or all of  his  minor children to be partner or partners  on  their attaining majority and such nomination or appointment  could be  made even by a will or codicil.  The  assessee  retained complete  control  over  the  running  of  the   partnership business  and it can hardly be said that he needed any  help from  his daughters particularly when there is  no  evidence that  he was in a weak state of health, his age being  below 50  years.   Moreover  there is nothing  to  show  that  the daughters   had  any  specialised  knowledge   or   business experience so as to be able to assist in the development  or management  of the business.  We are wholly unable in  these circumstances  to accept that the present case is  different from Dr. George Kuruvilla’s(1). in our judgment there was no cogent  material to come to the conclusive that the gift  of Rs.  25,000/- to each of the daughters by the  assessee  was "in the course of carrying on the business" of the  assesese and was "for the purpose of the business". It  may  be recalled that the assessee had  himself  made  a return  in  the  matter of assessment of  Gift  tax  payable tinder  the  Act in respect of the amount  of  Rs.  50,000/- which  had  been gifted by him to his  two  daughters.   The answer  to question No. 3, consequently, would be in  favour of  the  Revenue  and against the assessee so  far  as  that amount is concerned. For the reasons given above the answers returned by the High Court  are discharged and in their place the question  shall stand                             827 answered  in accordance with this judgment in the  following manner : Question No. 1 : does not arise. Question  No. 2 as reframed : The first part is answered  in the negative and in favour of the assessee.  The second part does not arise. Question No. 3 : The answer is in favour of the Revenue  and against  the assessee so far as the gift of Rs. 50,000/-  is concerned. The  appeal  shall stand disposed of  accordingly.   In  the circumstances of the case we make (no order as to costs. G. C.                     Appeal dismissed. 828