All these appeals involve same questions arising our of substantially t h e same facts. They are, therefore, death with by this common order. assesses are aggrieved by imposition of gift-tax regarding exercise of certain power of appointment. There are number of grounds but they are all arguments to show how wrong Commissioner (Appeals) was in partially confirming imposition of tax. 2. We will first take up GT Appeal No. 51 (Ahd.) of 1983. Smt. Anarkali Sarabhai, whatever is stated regarding her case will apply to other cases except minor factual details which are not material. That is how matter was argued before us and that is how we will deal with it. 3. fact briefly are that in year 1960 assessee's mother, Bharatidevi, created trust of certain properties, giving trustees discretion to accumulate or distribute income and corpus among beneficiaries which included assessee. On 24-1-1976, trustees by resolution gave power of appointment in respect of portion (Since A) of properties to assessee that they would hold it with effect from 1-4-2001 or to death of last survivors of some other beneficiaries under trust for such person including assessee as she may appoint. By same resolution, trustees also reserved authority to direct that power of appointment exercised by her shall come into force on date earlier than 31-3-2001 and thereupon interest of assessee and another beneficiary in income shall cease and trustees hall act accordingly. On 31-3-1976 assessee exercised power of appointment irrevocably in favour of certain new trusts. On 1-12-1977 trustees of original Bharatidevi Trust resolved that said power of appointment exercised by assessee shall come into operation with effect from 1-12-1977 and interest of assessee and another beneficiary in net income of said portion of property shall cease with effect from that date and that trustees shall transfer said portion of properties to new trusts as directed by assessee in exercise of power of appointment. GTO held that exercise of power of appointment amounted to transfer of property under Gift-tax Act, 1958 ('the Act') and was, therefore, gift under Act. He valued gift at fair market value of entire corpus of properties which were subject-matter of exercise of power of appointment. 4. Commissioner (Appeals) held same view that exercise of powers amounted to gift but so far as value of gift was concerned, he held that only interest of assessee in property can be said to have been gifted and that was to be valued and, therefore, restored matter to GTO to make fresh assessment in accordance with law after evaluating interest of appointed trust as on 31-3-1976 and assess only value of such interest in assessment year in respect of each of this trust. 5. In order to appreciate controversy material parts of above instruments are reproduced below: I. Deed of settlement dated 30-3-1960 (i) From and after date hereof and during periods mentioned in this clause, trustees may either accumulate net income of trust funds or at their discretion pay same to persons as hereinafter mentioned or to any one or more of them to exclusion of others or other of them for their, his or her obsolete use and benefit, in such proportions and in such manner as trustees may in their absolute discretion think fit, provided, however, that whole or any part of net income of trust funds as may not have been distributed by trustees in any year shall at end of year be added to and held as exception to capital and form part of corpus of trust funds and shall be dealt with accordingly. (a) ** ** ** (b) From and after 1-1-1967 and up to and including 24-3-1978 to settlor's sisters Geeta Mayor and Gira Sarabhai and settlor's daughter Smt. Anarkali Sarabhai or survivors or survivor of them. (ii) ** ** ** (iii) Notwithstanding anything here in above contained, trustees shall have full power and obsolete authority to divide, distribute, hand over and transfer absolutely corpus of trust funds or any part or parts thereof at any time or times after date hereof and during periods mentioned in this clause to and amongst persons hereinafter mentioned or to any one or more of them to exclusion of others or other of them in such proportions and in such manner and at such time or times as trustees may in their absolute discretion think fit. (a) ** ** ** (b) From and after 1-1-1967 amongst Gira Sarabhai, Geeta Mayor, Vikram n d settlor's daughter Smt. Anarkali Sarabhai or survivors or survivor of them. II. Resolution dated 24-1-1976 (at page 14 of paper book) Resolved unanimously that in exercise of discretion vested under clause 1 of trust deed, trustees do hereby set apart portion of trust funds represented by investments more particularly specified in schedule here under written held directly or through partnership ('which portion of trust funds is hereinafter referred to as 'Slice of trust funds') and shall deal with said slice of trust funds in following manner: (a) trustees shall pay net income of slice of trust funds arising or occurring during period from 1-4-1976 and up to and including 31- 3-1978 to Smt. Anarkali Sarabhai for her absolute use and benefit and trustees shall subject to interest of said Smt. Anarkali Sarabhai and Gira Sarabhai in net income of slice of trust funds in terms of paragraph Nos. 1 (a) and (b) hereof hold with effect from 1-4-2001 or up to death of last survivor of Gira Sarabhai, Geeta Mayor and Smt. Anarkali Sarabhai whichever date is earlier corpus of slice of trust funds for such person or persons including said Smt. Anarkali Sarabhai and for such object or objects, purpose or purposes either absolutely or in trust or trusts and upon such terms and conditions including grant of further power to appoint as said Smt. Anarkali Sarabhai may by deed or deeds appoint at any time before 1-4- 2001 without transgressing provisions of section 13 and 14 of Transfer of Property Act, 1882 provided, however, that trusts shall have full power and absolute authority to direct that power of appointment exercised by said Smt. Anarkali Sarabhai shall come into force at any earlier date before 31-3- 2001 and thereupon interest said Smt. Anarkali Sarabhai and Gira Sarabhai in net income of slice of trust funds shall cease and trustees shall act accordingly. If said Smt. Anarkali Sarabhai shall die before 31-3-1978 trustees shall deal with and dispose of net income of slice of trust funds accruing or arising during period from and after death of said Smt. Anarkali Sarabhai and up to including 31-3-1978 in accordance with provisions contained in clause 1 of deed of settlement. (b) From and after 1-4-1978 and including 31-3-2001 or up to death of t h e last survivor of Gira Sarabhai, Geeta Mayor and Smt. Anarkali Sarabhai whichever date is earlier, trustees shall pay net income of slice of trust funds accruing or arising during aforesaid period to said Gira Sarabhai for her absolute use and benefit. If said Gira Sarabhai shall not then be living or shall die at any time during aforesaid period, trustees shall deal with net income of slice of trust funds accruing or arising during period from and after death of said Gira Sarabhai in accordance with provisions contained in clause 2 of said deed of settlement. III. Exercise of powers on 31-3-1976 by assessee Now this appointment wetness that appointed hereby irrevocably appoints and directs that from and after 1-4-2001 or date of death of l s t survivor of Gira Sarabhai, Geeta Mayor and Smt. Anarkali Sarabhai whichever date is earlier investments forming part of slice of trust funds shall be transferred and assigned by trustees of said deed of settlement dated 30-3-1960 to trustees of following trusts. IV. Resolution dated 1-12-1977 of trustees of Bharatidevi Trust Resolved that trustees, in pursuance of power vested in them under resolution passed by them at meeting held on 24-1-1976 do hereby unanimously direct that power of appointment exercised by Smt. Anarkali Sarabhai shall come into force with effect from 1-12-1977 and that interest of Smt. Anarkali Sarabhai and of Gira Sarabhai in net income of slice 'A' of trust funds more particularly described in Schedule 'A' here under written, shall cease with effect from said date, i.e., 1-12-1977 and that trustees shall divide said slice 'A' of trust funds and transfer and assign to each of following trusts portion of slice 'A' of trust funds allocated to each of them as per particulars given below in terms of power of appointment exercised by said Smt. Anarkali Sarabhai. 6. simple question before us is whether assessee by exercising power of appointment has made any gift and if so of what property. This means that first issue is whether there has been transfer of property as defined under Act. relevant provision runs as follows: "2. (xxiv) 'transfer of property' means any disposition, conveyance, assignment, settlement, delivery, payment or other alienation of property and, without limiting generality of foregoing, includes - (a) and (b) ** ** ** (c) exercise of power of appointment of property vested in any person, not owner of property, to determine its disposition in favour of any person other than donee of power; and" 7. In this connection learned counsel for assessee Shri S. P. Mehta argued that sub-clause (c) of section 2 (xxiv) of Act means that it is scope of power which has to be taken into account and that since in this case power could be exercised in favour of donee also, clause was not applicable and so there was no transfer of property. To clarify, argument was that if power was such that it could be exercised in favour of donee it did not matter that it had not been so exercised. Thus, it is not exercise of power which is material but it is nature of power or its scope which is important. This means that words 'to determine its disposition in favour of any person other than donee of power' have not to be connected with words 'exercise of but with words 'power of appointment'. said sub-clause (c) was amended by Finance (No. 2) Act, 1980 by introduction of words 'whether general, special or subject to any restrictions as to persons in whose favour appointment may be made' after words 'power of appointment' and before words 'of property vested in any person' in said sub-clause. In this connection, Shri Mehta cited decision of Bombay High Court in case of CGT v. Mrs. Jer Mavis Lubimoff [1978] 114 ITR 90. In that case assessee was donee of special power of appointment which she exercised in favour of her daughter. Court held that exercise of such power did not amount to transfer within meaning of said sub-clause (c). It observed as follows: "Clause (c) has to be interpreted as whole and if upon proper interpretation of language of clause (c) it is quite evident that it is referable only to exercise of general power of appointment then mere omission of word 'general' before words 'power of appointment ' will not be decisive of matter. It is quite implicit in language of clause (c) that exercise of power of appointment of property therein referred to must determine its disposition in favour of any person other than donee of power. words 'any person other than donee of power' clearly indicate that whenever such power is exercised it should be capable of being exercised in favour of anybody except donee of power. Such ingredient can only be fulfilled if power conferred is general power of appointment. In case of special power of appointment it can only be exercised amongst members of specified class. words 'any person' will not fit in if clause (c) contemplated special power of appointment because, if that is so, such power is not capable of being exercised by any and every person other than donee of power. Thus, on plain reading of clause (c) it is quite evident that even though expression 'general power of appointment' is not specifically used, it is referable to only general power of appointment because power must be such that it should be capable of being exercised to determine disposition of property in favour of any person other than donee of power ...." (p. 104) He also relied upon memorandum explaining proposed amendment in Finance Bill, 1980. memorandum is fully reproduced below: "VII. Proposed amendment to Gift-tax Act 138. At present, no gift-tax is attracted in case where beneficiary of trust exercises power of appointment conferred on him under trust deed and releases his or her life interest in trust in favour of other persons. It is proposed to plug this lacuna in provisions of Gift-tax Act. Accordingly, it is proposed to provide that where person who has interest in property as tenant for term or for life or remainderman surrenders or relinquishes his interest in property or otherwise allows his interest to be terminated without consideration or for consideration which is not adequate, value of interest or, as case may be, amount by which such value exceeds consideration received will be deemed to be gift made by such person. It is also proposed to amend definition of 'transfer of property' contained in clause (xxiv) of section 2 to make it clear that exercise of power of appointment would amount to transfer irrespective of whether such power is general or special or subject to any restriction as to persons in whose favour appointment may be made. 139. These amendments will take effect from 1st April, 1980, and will accordingly, apply in relation to assessment year 1980-81 and subsequent years." He further argued that since there was already transfer of property to trustees, exercise of power of appointment was merely step in process of carrying out direction of trust and did not amount to fresh transfer. 8. learned standing counsel Shri V. R. Shah for revenue divided his arguments in two parts: (a) substance of transaction; and (b) form. He argued that first of all assessee-beneficiary had done transfer after power of appointment has been granted to her. Further very subtle argument was developed by him that under original trust deed corpus of trust could be given only to certain beneficiaries and since assessee excercised power of appointment in favour of trust which were not beneficiaries under original trust deed, it must be said that assesse had full title and right to property in question which she in turn gave to newly created trust. argument was that trustees did not have any power of delegation of their own power under original trust deed to any of beneficiaries and beneficiary assessee was not exercising such power, it could not, therefore, be said that there was transfer from trustees of original Bharatidevi Trust to new trust merely under direction of assessee. Under that trust deed trustees did not have any power to transfer corpus to new trust. Therefore, there could not be any direct transfer by these trustees to new trust. If there was such transfer by them that would be invalid. But trustees are presumed to act within their powers and so inference is that what they had done was to transfer certain property to assessee. result of this argument would be that direct connection between trustees of Bharatidevi Trust and new trusts in respect of transfer is broken. 9. Regarding form of transaction Shri Shah pointed out that under section 5 of Transfer of Property Act transfer included conveyance by person not owner of property. Therefore, that was position even before enactment of sub-clause (c) of section 2(xxiv). Consequently, it was not necessary that transfer should come within meaning of said sub- clause (c). 10. Shri Shah also laid emphasis on sentence in aforesaid observation of Bombay High Court that "it is quite implicit in language of clause (c) that exercise of power of appointment of property therein referred to must determine its disposition in favour of any person other than done of power". Therefore, he submitted that according to that decision it was exercise of power which was material and not its scope. 11. Shri Mehta replied that under clause (1) (iii) of Bharatidevi Trust trustees had power to transfer corpus of trust to any one of persons mentioned in deed in such manner as they thought fit. words 'in such manner' enable trustees to give general power of appointment to assessee beneficiary and so exercise of power of appointment in favour of new trust was contemplated by original trust deed. Thus, there was direct transfer from trustees of Bharatidevi Trust to new trust, assessee merely given direction so to do. 12. interpretation canvassed by Shri Mehta makes nature or scope o f power decisive. If nature of power is of certain kind then no matter how or in whose favour it has been exercised, there would be transfer or not as case may be. Now, what could be purpose of such enactment by Legislature which is concerned only with imposition of tax on making of gift? It would make no difference to Legislature as to whom gift is made. Since it is exercise of power which would ultimately cause transfer and consequently gift, it is exercise of that power which is material and not its mere existence. scope of power is material only of determining validity of its exercise. It merely enables its exercise. Its significance is co-extensive with its exercise and no more. From point of view of Legislature it would make no difference what scope of that power is. It does not stand to reason that Legislature would tax gift made in exercise of general power and not tax it when made in exercise of special power. distinction without any purpose cannot attribute to Legislature. From point of view of Legislature it is not material to whom gift is made or in exercise of what kind of power provided it is made to person other than donee of power. T he expression 'any person other than donee of power' has to be read as whole and word 'any' cannot be read in isolation. All that this expression means is that appointee should not be done of power. Provided this requirement is satisfied it could be person who could either fall in specified category or not. requirement of word 'any' would be satisfied provided appointee is not done of power. If appointee is done of power then it would be straight gift from donor of power of appointment to done of that power. In said clause we are concerned with exercise of power by done of power and not by donor. That is why words 'any person on than done of power' have been inserted in clause. That is only purpose of inserting those words. Therefore, no inference can be based on these words that clause is concerned with scope of power. 13. In case of Mrs. Jer Mavis Lubimoff (supra) assessee fully exercised power she had. Thus, scope of power was same as its exercise, i.e., extent of its exercise. Therefore, question did not arise there whether only scope was to be seen and not its exercise. Such question can arise only in this case because here assessee had power to exercise it in her own favour but did not exercise it, i.e., scope of power was wider than extent of its exercise. Thus, question of scope is separated from that of its exercise in this case and not in case of Mrs. Jer Mavis Lubimoff (supra). Therefore, Court in that case in saying that scope was relevant did not say that exercise was not relevant. For its purpose both were same. It could very well have stated that since power was exercised in favour of person falling within class specified therein, there was no transfer. Moreover, it is not clear whether Court is fact considered exercise relevant or scope. first part of above quotation suggests former while second part indicates latter. Therefore, this decision does not support assessee. 14. Reliance has been placed as indicated above on memorandum explaining amendment to Act. paragraph which has been quoted above falls into two parts. Regarding release of life interest it has been clearly mentioned that there was lacuna in Act but that is not so regarding amendment of definition of transfer. In connection with that amendment it has been stated that amendment is introduced with view to make it clear, etc. This means that so far as meaning of word 'transfer' was concerned there was no lacuna and that meaning was that which has been clarified by amendment. Therefore, said memorandum implies that from beginning it did not make any difference whether power of appointment was general or special. For above reasons we are of view that it is not scope of power but its exercise which is relevant. Since it this case power has been exercised in favour of persons other than done of power there has been transfer although it could have been exercised in favour of done herself. 15. Regarding Shri Mehta's argument based on words 'in such manner' i n Bharatidevi Trust deed we are bound to say that that expression cannot cover authority to transfer corpus to persons other than beneficiaries. This meaning is so plain that no further reasons are necessary. No part of instrument can be so read as to clash with another part. Here if trustees had such power naming of beneficiaries in trust deed would become useless. Therefore, it cannot be said that there has been direct transfer from trustees of Bharatidevi Trust to new trust. 16. Commissioner (Appeals) has held that there has been multilateral transaction in this case because trustees of Bharatidevi Trust had accelerated date for coming into effect of power of appointment which had been exercised. This question would have relevance only if it was necessary to consider whether there has been disposition of property under section 2(xxiv). However, in view of inclusive definition of transfer it is not necessary to consider that question. exercise of power of appointment is itself transfer under sub clause (c). 17. Further it has been argued that gift-tax can be levied only when there is transfer of property by owner of property, relying upon decision of Tribunal in WT Appeal No. 1245 (Ahd.) of 1961-62 dated 3-4- 1963. That was gift-tax matter and it was held that assessee would have interest in property only if power of appointment was exercised in his own favour. That, however, is not issue here. Under said sub-clause (c) exercise of power of appointment amounts to transfer and for that purpose it is not necessary that it should be exercised by person who owns property. assessee has argued that there would be double taxation in this case once t time when property was transferred to Bharatidevi Trust and second at time of exercise of power of appointment. That, however, is natural consequence of events that have happened in this case. property has been transferred to new trusts who were not beneficiaries under Bharatidevi Trust and, therefore, tax paid in respect of first transfer to that trust will not cover this transfer to new trusts. 18. Reliance has also been placed on decision of Tribunal in case of Gita Mayor [WT Appeal No. 25 (Ahd.) of 1981, dated 27-8-1982]. That was case where assessee had vested life interest in property and by her relinquishment of that life interest question of gift arose. In present case there is no such vested life interest. Moreover what is sought to be taxed is not transfer of any life interest but right to receive corpus of property in future at particular point of time. assessee's argument based on memorandum regarding amendment which has been quoted above, has no application here because it is not relinquishment of life interest with which we are concerned here. Section 4(1) (e) of Act refers to vested interest and not to kind of interest as in this case. Here under resolution trustees were to hold corpus from 2001 or up to death of persons mentioned in resolution for benefit of assessee or other persons as appointed by her including herself. This presumes that assessee live up to that point of time. Therefore, she had no vested life interest in corpus. Question has been raised as to assessment year in which transfer is said to have been made. simple answer is that since exercise of power of appointment amounted to transfer as defined under section 2(xxiv) (c) taxable event, i.e., gift occurred in assessment year 1976-77. 19. last question is reading valuation of property which has been transferred. For this purpose only interest of assessee in property has to be value of entire corpus cannot be taken because as on date of exercise of power of appointment that was not owned by assessee. What assessee had on that date was expectation of receiving that corpus on date mentioned in first resolution of trustees dated 24-1-1976 subject to any interest of any person in income of corpus. It is this which will have to be valued. While making this valuation it is important to bear in mind that trustees had power of advancing date of coming into effect of exercise of power of appointment which, therefore, need not wait till year 2001. It could be very next day after exercise of power. Since power included power to exercise it in her own favour there was possibility that assessee may become owner of corpus immediately after she exercised power. What has happened in this case is that transfer of corpus has been divided into two parts by instrumentality of power of appointment. trustees retained legal ownership of corpus and power to fix date of its transfer while assessee had right to order transfer and right to name transferee. When both trustees and assessee exercise their powers and when that becomes effective transfer of corpus is complete but not until then. Thus, transfer of corpus in these cases takes place on date named by trustees for exercise of power of appointment to become effective. On that date complete corpus is transferred but until then it is not corpus which is transferred but assessee's interest in it is transferred. Therefore, for this assessment year it is that interest which has to be valued and for balance which makes totality of corpus it is that assessment year relating to date named by trustees (for exercise of power to be effective) in which value of balance which becomes taxable. total of valuations of both must come to value of entire corpus. In case of assessee Smt. Anarkali Sarabhai Commissioner has directed GTO to value interest of assessee which has been transferred as on 31-3-1976. However, in case of other assesses Commissioner has held that actual transfer took place on 1-12- 1977, i.e., date when power of appointment was made to come into effect by second resolution of trustees of original Bharatidevi Trust. According to him it was that date on which corpus was distributed among new trusts and vested in them. We are unable to agree with this view. Since taxable event is transfer and transfer has been defined to include exercise of power of appointment, it is date on which power of appointment was exercised, which is material date. Therefore, valuation has to be done as on that date and not on date when trustees by their second resolution made power effective. Therefore, for purpose of valuation of interest of assessee which has been transferred as indicated above, this matter has been rightly restored to GTO by Commissioner. Regarding other assesses Commissioner's order is modified to effect that valuation has to be taken as on date on which power of appointment has been exercised by assessees. In determining value of gift in case of all assessees, value of shares should be decided in light of all relevant evidence which has been submitted so far and which may be produced by both parties before GTO including aspect of discounting value of shares. 20. All appeals are partly allowed. *** SMT. ANARKALI SARABHAI v. GIFT TAX OFFICER