Indian Kanoon - Search engine for Indian Law

(1) Smt. Satya Bhama, wife of his brother, Ram Nath, (2) Smt. Gulab Devi, his mother, (3) Smt. Kartari Devi, his step-mother, (4) Naresh Kumar, (5) Ravinder Kumar, and (6) Rajinder Kumar, his three minor sons.

This gift was considered for gift-tax by the Gift-tax Officer. The plea raised by the assessee was that the gift was invalid because by the gift, ancestral immovable property, which was joint Hindu family property, had been transferred, and that the assessee as a karta of the family could not transfer the same including his own interest, according to the well-settled rule of Hindu law, and, therefore, there was no valid gift. In other words, the transaction of gift was void. This plea did not prevail with the Gift-tax Officer. The Gift-tax Officer valued the gifted land at Rs. 65,000 and levied gift-tax thereon.

The revenue then moved the Income-tax Appellate Tribunal under section 26(1) of the Gift-tax Act, 1958, for referring the question of law, already set out in the opening part of this order, for the opinion of this court.

Mr. Awasthy, learned counsel for the revenue, contends that the gift in question is voidable and not void. So long as the gift is not avoided, it will hold the field and would be a good gift so far as the gift-tax Act is concerned. The learned counsel places his reliance mainly on the decisions of the supreme Court in Raghubanchmani Prasad Narain Singh v. Ambica Prasad Singh, Guramma Bhratar Chanbasappa Deshmukh v. Mallappa Chanbasappa, Raghbir Singh Sandhawalia v. Commissioner of Income-tax, Jugal Kishore Jai Prakash v. Commissioner of Income-tax and Subba Goundan v. Krishnamachari. The learned counsel, however, concedes that if we come to the conclusion that the gift is void ab initio, he would not be able to take any exception to the decision of the Tribunal, but his principal contention is that the gift in a court of law, the tribunal was in error in holding the gift to be void.

The property admittedly is coparcenary property. The three sons of the donor had interest in it by birth. In other words, the donor and his three sons were the owners of every bit of property and none of them could say till there was a partition that anyone of them had a specific share in it. The other three donees, i.e., the brothers widow, the mother and the step-mother are not the members of the coparcenary and, to all intents and purposes, would be strangers. So far as the gift to the three females is concerned, the gift, being to strangers of coparcenary property, would be void. The rule of Hindu law on this matter is clear and no authority taking a contrary view has been brought to our notice. So far as the three sons are concerned, there would be no transfer of ownership from the donor to the donee, because the donees are themselves also owners of the property. They would not be acquiring any property under the gift. It is not a case where there has been a partition of the property and the father is transferring his share after the partition to the sons by gift. Therefore, in the case of sons, there would be no gift within the meaning of the Gift-tax Act. And if there is no gift, the jurisdiction of the Gift-tax Officer to tax the same does not arise. It was conceded by Mr. Awasthy, learned counsel for the department, that the factum of the gift has to be proved, i.e., there must be a gift within the meaning of the Gift-tax Act before the gift can be held to be taxable. If there is no gift, the Gift-tax Officer cannot bring it to tax. However, the text of Hindu law is very clear that a father cannot make a gift of the coparcenary property to his minor sons. If he does so, the gift would be void. It appears to me that in view of the provisions of the Gift-tax Act and the provisions of the Hindu law, the gift in question would be void.

The next decision, which has taken the same view, is Smt. Valluri Janakamma v. Commissioner of gift-tax. In this case, a gift of joint family property of which the assessee was the karta was made by him. This gift was sought to be taxed under the gift-tax Act. It was maintained by the assessee that the gift was void as no gift could be made of the joint family property. This contention was not accepted by the Gift-tax Office, the Appellate Assistant Commissioner and the Tribunal. On a reference, P. Jaganmohan Reddy C.J. and Venkatesam J. held :