Gift before taking up sanyas - Is renouncing world contemplation of death?
Somebody is fed up with this world, but he is not contemplating death. Instead he wants to take sanyas . But before that he wants to gift his property to his friends. Should the friends pay tax?
This is not a hypothetical issue. One such case reached the ITAT.
One Miss Preeti Jaswantlal Shah is claimed to have renounced the world and became a ' Sadhvi ' under Swetambar Jain Sect on 26.1.1991. Before that on 14.1.1991 she issued the declaration that she has decided to renounce the world and become a sadhvi . This act presupposes that she shall not have any worldly attachments. She was a partner in several firms. Before becoming a Sadhvi , she divided her property between her brothers.
And tax was demanded. The Appellate Commissioner held that when one enters into a religious sect, such action is tantamount to civil death and this declaration can only be taken as a declaration made in contemplation of death.
On appeal in the ITAT, the Member (J) agreed with the appellate commissioner, but Member(A) held that the donor must be ill and expect to die shortly of the illness. One also has to proceed on the basis that planning to take up sanyas is to be treated as an illness, and perhaps terminal illness. That is too farfetched a proposition to meet judicial approval; 'gifts in contemplation of death' implies reference to natural death alone. There is nothing to suggest it also takes care of gifts in contemplation of a civil death. And the President as third Member agreed with this view. (2006-TIOL-35-ITAT-MUM)