Per T.J. Joice, A.M.—As these appeals involve identical issues, they are disposed of by a common order for the sake of convenience. The assessment years involved are 1982-83 to 1986-87 (both inclusive). The appeals by the assessee are directed against the orders of the CIT(A), Belgaum, dated 31-12-1992, in which he has upheld the Gift-tax assessments made for these years by the Assessing Officer.

2. The assessee firm is doing the business of running a cinema theatre, exhibiting and distributing films, taking cinema theatres on hire/lease and other connected activities. While doing the IT assessment, the ITO noticed that the assessee had kept huge amounts in deposits with its sister concern M/s. Raikar Entertainments, but it had not claimed or received any interest on these deposits. Therefore, the Assessing Officer concluded that the assessee had forgone its right to receive interest on the deposits without adequate consideration and hence, he treated it as a deemed gift and initiated GT proceedings against the assessee. The assessee, however, filed nil returns of gift and pleaded before the Assessing Officer that there was no deemed gift. In consideration of keeping deposits free of interest with sister concern, they would get the exclusive rights to exhibit their films in the theatre Shakti Talkies and accordingly no interest on these deposits was received. The assessee also furnished a letter dated 10-2-1986 of the sister concern in support of the contention. However, the Assessing Officer did not find any merit in this contention because the assessee was paying rent for the films exhibited in Shakti Talkies and, therefore, the rent paid itself formed consideration for utilisation of the cinema theatre. Moreover, according to the Assessing Officer, Sri Shakti Talkies was handed over to the owners on 7-2-1985 and the assessee started exhibiting the films taken from the exhibitors in other theatres. Even after Sri Shakti Talkies was not available, the assessee continued to keep the deposit with its sister concern free of interest. In this view of the matter, the Assessing Officer considered the total interest forgone for the assessment years 1982-83 to 1986-87 calculated at 18% on the average of the opening and closing balance of deposits in each year and this amount he treated as the deemed gift by way of surrender of right of interest on deposits kept with sister concern and brought to tax under the Gift-tax, Act, 1958. The average deposit and the amount of interest calculated thereon for the various years is as under :

From the amount of deemed gift as arrived at above, the Assessing Officer granted basic exemption under section 5(2) amounting to Rs. 5,000 for each of the years and on the balance amount he levied gift-tax.

3. Aggrieved by the abovesaid orders of the Assessing Officer, the assessee approached the CIT(A) before whom the decision of the Bombay High Court in CIT v. Bombay Samachar Ltd. [1969] 74 ITR 723 was quoted by the assessee. However, the learned CIT(A) was of the view that this decision did not pertain to Gift-tax matters. He held that the issue is covered by section 4(1)(a) of the GT Act, which reads as under :

Section 4(1)(a) : "Where property is transferred otherwise than for adequate consideration, the amount by which the market value of the property at the rate of the transfer exceeds the value of the consideration shall be deemed to be a gift made by the transferor."

4. The CIT(A) accordingly held that the transfer (sic) of the right would amount to a deemed gift and has been rightly taxed by the Assessing Officer.

5. We have heard Shri S. Parthasarathi, the learned counsel for the assessee and Shri N.S. Raghavendra, the learned DR Shri Parthasarathi reiterated the