TMI Blog1968 (7) TMI 4X X X X Extracts X X X X X X X X Extracts X X X X ..... in the previous year ending on April 13, 1958, was liable to assessment under the Gift-tax Act ? The reference under the Income-tax Act relates to the assessment year 1959-60, under the Wealth-tax Act to the assessment year 1957-58, the valuation date being April 12, 1957, and under the Gift-tax Act to the assessment year 1958-59. The assessee is one M. P. R. Periakaruppan Chettiar. The facts leading to the reference been common, the references may be dealt with together. One Muthukaruppan Chettiar, who had business in Ceylon and India, had four sons, Narayanan Chettiar, Ramaswami Chettiar, Periakaruppan Chettiar and Palaniappan. By two instruments dated April 26, 1932, marked as exhibits A and A-1, Muthukaruppan Chettiar, in consideration of natural love and affection towards his first three soils above named, gifted, granted and conveyed to them and their respective heirs, executors, administrators and assigns, all his Ceylon assets. To his last son, who was then a minor, he is said to have given cash and certain properties in India, as it is reported that his fourth son could not be a party to the deeds of gift as above, in accordance with the law as administered in Ceylon. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing answered. Both the learned counsel for the revenue and the assessee press into service the ratio in Arunachala Mudaliar v. Muruganatha Mudaliar in support of their respective contentions. The facts in that case as found in the report may be usefully referred to. The case dealt with a will : " It recites that the testator is aged 65 and his properties are all his own which he acquired from no nucleus of ancestral fund. He had three sons, the eldest of whom was defendant No.1. In substance what the will provides is that after his death, the A Schedule properties would go to his eldest son, the B Schedule, properties to his second son and the properties described in Schedule C shall be taken by the youngest. The sons are to enjoy the properties allotted to them with absolute rights and with powers of alienation such as gift, exchange, sale, etc., from son to grandson hereditarily. The testator, it seems, had already given certain properties to the wives of his two brothers and to his own wife also. They were to enjoy these properties during the terms of their natural lives and after their death, they would vest in one or the other of his sons, as indicated in the will. The D S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld have to collect the intention of the donor from the language of the document taken along with the surrounding circumstances in accordance with the well-known canons of construction. Stress would certainly have to be laid on the substance of the disposition and not on its mere form. The material question which the court would have to decide in such cases is, whether taking the document and all the relevant facts into consideration, it could be said that the donor intended to confer a bounty upon his son exclusively for his benefit and capable of being dealt with by him at his pleasure or that the apparent gift was an integral part of a scheme for partition and what was given to the son was really the share of the property which would normally be allotted to him and in his branch of the family on partition ? In other words, the question would be whether the grantor really wanted to make a gift of his properties or to partition the same ? As it is open to the father to make a gift or partition of his properties as he himself chooses, there is, strictly speaking, no presumption that he intended either the one or the other. " Thus understood, the law is that there is no presumption ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in that the substance of the disposition was in the nature of a devise for a partial partition of his properties. In our view, the reference to " heirs, executors, administrators and assigns " appended to the word " donees " in the deeds under consideration does not further the intention of the donor to make the legacy a family bounty. They are perhaps adopted in the deed as words of art quite commonly used and adopted by skilled draftsmen. It is difficult to refer to them alone, in the absence of any presumption, and construe the documents as conferring a benefit on the family of the assessee and not absolutely on him. The language employed does not support the view that it was a devise to partition, Thus, the Language in the documents and the text therein cannot help the assessee. There are indeed no surrounding circumstances either in this case which, read in the light of the usual norms of construction, can be said to raise such an intention on the part of the donor to confer a bounty on the family of the assessee. No doubt, the word " partition " appears in the document dated December 20, 1950. But in the fasciculus of events narrated in this deed, the original of which is i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e would have got it otherwise than by a deed of gift. In our opinion, he would have. " It is not known how, unless this Ceylon properties are ancestral properties when in fact they are not. We are, therefore, unable to agree with the reasoning and conclusion of the Tribunal that the claim of the assessee to be assessed as Hindu undivided family is justified. The first question is, therefore, answered in the negative and against the assessee. The answer to the second question follows from the answer to the first. As we are of the view that what was given and taken by the assessee under exhibits A and A-1 is his self-acquired property and is to be treated as such, the sum of Rs. 1,60,000 transferred to the account of Muthukaruppan and Palaniappan (the sons of the assessee) in the previous year ending on April 13, 1958, is a gift pure and simple and is liable to assessment under the Gift-tax Act. The second question is, therefore, answered in the affirmative and against the assessee. The tax case is allowed with costs. Counsel's fee Rs. 250. Tax Case No. 326 of 1964. In the view expressed by us in Tax Case No. 325 of 1964 that one of the brothers, Muthukaruppan Chettiar, cann ..... X X X X Extracts X X X X X X X X Extracts X X X X
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