T.U. Mehta, J.
1. The Appellate Tribunal has referred to us the following question for our opinion in this reference :
'Whether, on the facts and in the circumstances of the case, the previous year should be the financial year for assessing the gifts made on February 2, 1963, and the assessment year should be 1963-64 ?'
2. The above question arises from the following set of facts. The assessee is found to have made gifts of Rs. 40,000 to Shri Hiralal Manilal and Rs. 25,000 to Smt.Savitaben Hiralal on February 2, 1963. She filed a voluntary return for these gifts under the Gift-tax Act showing the assessment year as 1964-65 and the previous year as S.Y. 2019 which commenced on October 29,1962, and ended on October 17,1963. On the basis of this return, the Gift-tax Officer carried out the assessment on the amount of Rs. 65,000.
3. The assessee contended before the Gift-tax Officer that the year of assessment for both the gifts should be the year 1963-64 and not 1964-65 . She, however, failed in this contention before the Gift-tax Officer, and, hence, took the matter in appeal before the Appellate Assistant Commissioner. The Appellate Assistant Commissioner found that the assessment year for the gifts in question was correctly adopted as the year 1964-65. Being aggrieved by this, the respondent-assessee approached the Appellate Tribunal. The Appellate Tribunal considered the provision of section 2, clause (xx), which defines the expression 'previous year' and came to the conclusion that sub-clauses (a) and (b) thereof had no application to the facts of the case. The Appellate Tribunal, however, found that sub-clause (c) of clause (xx) of section 2, which is the residuary clause applied to the facts of the case and held that even though the accounting year of the assessee for the purpose of income-tax was Samvat year, on a proper construction of sub-clause(c), the same should be taken as financial year. Sub-clause(c) of clause(xx) says that in cases where sub-clause (a) and (b) do not apply, the 'previous year' would mean the 'previous year' as defined in section 3 of the Income-tax Act, if an assessment were to be made under that Act, for that year. The Tribunal was of the view that sub-clause (c) should be construed as saying that in cases where sub-clause (a) and (b) do not apply, in order to determine 'previous year' for the purpose of gift-tax should be treated as 'income' to the donor from an undefined source, and since it cannot be related to any other sources of the income of the donor, its previous year should, according to the principles of section 3 of the Income-tax Act, be presumed to be the financial year. According to the Tribunal, this would be so even if for other sources of the donor's income the accounting period is the Samvat year. Being aggrieved by this reference in which the above question is referred to us for our opinion.
4. So far as the Gift-tax Act is concerned, the expression 'previous year' so defined in section 2 thereof as under :
'Previous year' in relation to any assessment year -
(a) in the case of an assessee having no source of income, profit or gains or having a source of income, profits or gains in respect of which there is no previous year under the Income-tax Act, means the twelve months ending on the 31st day of March immediately preceding the assessment year;
(b) in the case of an assessee having different previous years under the Income-tax Act for different sources of income, profits or gains, means that previous year of twelve months determined as the previous year under sub-clause (a) or sub-clause (b), as the case may be, of sub-section (1) of section 3 of the Income-tax Act or such period determined as the previous year under clause (c) of that sub-section, whichever expired last;
(c) in the case of any other assessee, means the previous year as defined in section 3 of the Income-tax Act if an assessment were to be made under that Act for that year :
Provided that where a person who has not been assessed under this Act for any assessment year makes a gift on a date which does not fall within a previous year as defined in sub-clause (a) or sub clause (b) or sub-clause(c), the previous year shall be the twelve months ending on the 31st day of March immediately preceding the assessment year :
Provided further that when an assessment has been made under this Act for any assessment year in respect of gifts made by an assessee during any previous year, the meaning of the expression 'previous year' as then applicable to him shall continue to apply for any subsequent assessment year unless the assessee is allowed to vary it with the consent of the Gift-tax Officer who may, in allowing any such variation, impose such conditions as he may think fit.'
5. The question which arises to be considered is in which of the three sub-clause of clause (xx) of section 2 of the Gift-tax Act, the case of the assessee falls, Now, so far as sub-clause (a) and (b) are concerned, the Tribunal ruled them out as is clear from the following excerpt from the statement of case submitted to us :
'Before the Tribunal the assessee contended that the correct assessment year in his case should be 1963-64 in accordance with the provisions of the Gift-tax Act. The Tribunal referred to the definition of the 'previous year' under clause (xx) of section 2. Sub-clause (a) of clause (xx) relates to an assessee having no source of income or having a source of income but there is no previous year under the Income-tax Act. Admittedly, the case of the case where the assessee having different previous yeas under the Income-tax Act for different sources of income, etc., this clause also could not apply to the assessee, inasmuch an in the income-tax assessment, though there are different sources of income, there is only on previous year. Therefore, the only residual clause that applies to the applies to the case of the assessee is sub-clause (c).'
6. It is not disputed before us that the present case not governed either by sub-clause (a) or sub-clause (b) of clause (xx). As a matter of fact, it is found that for the income-tax assessment of the respondent-assessee for the years 1962-63, 1963-64 and 1964-65, the accounting period are mentioned as respective Samvat years. This is evident form annexure 'D' and 'E' which are filed in this reference. It is, therefore, evident that this is not a case where for assessment to income-tax the assessee has no previous year or has different previous years years for different psoriasis of income. Under the circumstances, the only question which survives for consideration is whether under sub-clause (c) and, on the facts of the case, the previous year for the Gift-tax Act would be the Samvat year as claimed by the revenue or the financial year as claimed by the assessee. The Tribunal has construed sub-clause (c) as meaning that the 'previous year' for the purpose of gift-tax should be determined by taking the event of gift as the event of earning income, and then deciding what would be the 'previous year' if the assessment of that income were to be made in the hands of the donor under the Income-tax Act. The reasoning of the Tribunal is contained in the following observations :
'On a plain reading of sub-clause (c) it appears to us that by a legal fiction the previous year is to be found out in respect of any gift coming under sub-clause (c) as if an assessment were to be made under the Income-tax Act. It is too well-known that the legal fiction cannot be extended beyond the purpose for which it is enacted. We must, therefore, strictly construe the legal fiction and decide as to what would be the 'previous year' by assuming that an assessment under the Income-tax Act is to be made. In that event there cannot be any doubt that the previous year would be the financial year as per section 3(1)(a) of the Income-tax Act.'
7. In our opinion, this approach is not correct, because sub-clause (c) contains no legal fiction. In fact, it is an illustration of incorporation 'by reference', inasmuch as it incorporates the definition of the expression 'previous year' as given in section 3 of the Income-tax Act even for the purpose of the Gift-tax Act under certain circumstances. Incorporation of a provision of law in a statute by reference to a similar provision in another statute is a recognised method of legislation. Whenever such a method is adopted, the provision of another statute to which a reference is made should be read as having been made under the statute which makes that reference. But there, the purpose of the reference ends, unless there is a clear indication that the reference is made to incorporate something more. In this case, reference to the definition of the expression 'previous year' as given in section 3 of the Income-tax Act is not made for the purpose of incorporating all the provision of the Income-tax Act. It is made only for a limited purpose of knowing what a 'previous year' means when sub-clauses (a) and (b) do not apply to the facts of a particular case. Therefore, the Tribunal's observation that we should decide what would be the 'previous year' for the purpose of gift-tax 'by assuming that assessment under the Income-tax Act is to be made' is not correct. Assessment for gift-tax has to be made under the Gift-tax Act and not under the Income tax Act if sub-clauses (a) and (b) do not apply. If this is so, 'gift' cannot be treated as 'income' in the hands of the donor. It is the donor who is principally liable to tax under the Gift-tax Act and the donor receives no income when he makes a gift. To hold that gift is income in the hands of the donor is to introduce a judicial fiction where the legislature has introduced none. Gift remains a gift and the only require which is required to be made for the purpose of sub-clause (c) of clause (xx) is to find out what would have been the 'previous year' if assessment of the incomes f the assessee were to be made for the purpose of the Income-tax Act for the assessment year in question. In this case the gifts to be assessed are made on February 22, 1963. The 'previous year' for the income assessment of the assessee was admittedly; the Samvat year corresponding to the assessment year in question. The day of February 22, 1962, and ending on October 17, 1963. The assessment year for this period would,; therefore, be the year 1964-65.
8. In view of this, we answer the question which is referred to us in the negative and against the assessee. In our opinion, the previous year should be the S.Y. 2019 for the gifts in question and the assessment year should be the year 1964-65. The respondent-assessee shall bear the cost of the Commissioner in this reference.
9. Question answered in the negative.