Prerequisites of Gift Transaction

Prerequisites of Gift Transaction

A gift transaction is not acceptable in substance merely because assessee has been able to file documents showing the form of the transactions such as affidavits, deeds, statements and transactions of gift through banking channels; for a gift to be genuine, surrounding circumstances, human probabilities and reality of human life are to be considered for determining genuineness of the gifts; the realities of human life in which a person would be motivated to give gift to another include the relationship between the donors and the donees, and emotional bondages, reciprocity showing that the two sides, one that of donor and the other that of donee are, in normal course, exchanging gifts of similar amounts on different occasions.
A person usually makes gifts to other person out of natural love and affection.

Krishna Mohan Agrawal
ITA No. 811/Luc/05
November 7, 2008

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It was held that since the donors of low income group and did not have any capital asset; any gift made by such donors is bound to be colorful. Thus gifts so received by the assessee could not be said to be genuine.


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