TMI Blog1987 (10) TMI 93X X X X Extracts X X X X X X X X Extracts X X X X ..... assets, the amount received by her against Policy No. 6070852, i.e. Rs. 37,181. The GTO reasoned that the amount was not a provision for marriage expenditure but was taken away by Miss Veena Aggarwal, hence, was a gift within the meaning of Gift-tax Act. 3. The learned AAC held it not to be a gift within the meaning of section 2(xii) of the GT Act and for the purpose he relied upon the decision of the ITAT rendered in the case of the very assessee for the assessment year 1976-77 in ITA No. 58/Del/81. The order is dated15-7-1980. The ITAT in the said order held that jewellery of Rs. 20,826, fiat car worth Rs. 36,784 and balance in Miss Veena Aggarwal's account in M/s Jai Bharat Steel amounting to Rs. 85,621 would be considered quite a reasonable dowry for the occasion since Miss Veena Aggarwal's marriage was a love marriage and in these circumstances, it will be quite natural for the parents to be a little conservative in giving dowry to the daughter. 4. The revenue is aggrieved and we have heard the parties at length. Shri C. S. Aggarwal has placed strong reliance on the decisions in K.SP.S.KT Kalyappa Chettiar (HUF) v. Second GTO [1984] 7 ITD 213 (Mad.), CGT v. Bandlamudi Subb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, and the premium thereof had always been paid out of the family funds. On26-4-1974when the policy was just about to mature, it was assigned to Veena Agarwal. The said policy matured onMay 20, 1974and thereafter a sum of Rs. 37,188 being the maturity amount was received by Veena Agarwal by a cheque dated3-7-1974issued by the LIC on Punjab National Bank, Darya Ganj,Delhi. When these facts came to the notice of the ITO holding jurisdiction over the assessee-Hindu undivided family, a letter was issued to the Divisional Manager, Life Insurance Corpn., asking for certain particulars regarding policy No. 6070852. In reply sent vide No. MTY : DO : RLC dated 10 /12-3-1979, the Divisional Manager stated as follows : "Dear Sir, RE : Pol. No. 6070852-fvg. ShriParmaNand Agarwal and Smt Kamla Aggarwal We are in receipt of your letter No. CC / XIV / 78-89 / 616 dated8-3-1979. As desired in your letter under reference we give below the required information : 1. The captioned policy was taken by Shri Parma Nand Aggarwal and Smt. Kamala Aggarwal in the joint name with date of commencement20-5-1959. 2. It was joint life endowment policy for 15 years with profit for the sum assured of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see-HUF in relation to its income-tax assessment for the Asstt. Year 1976-77 wherein it had been held while considering the adequacy or otherwise of withdrawals made for household expenses, that since the source of jewellery worth Rs. 20,826, Fiat car worth Rs. 36,784 and credit balance in the account of Veena Agarwal in the books of Jai Bharat Steel stood accepted, no addition could be made on account of inadequacy of withdrawals in the Asstt. Year 1976-77. According to Mr. Agarwal, the above order of the ITAT clearly shows that the sum in question of Rs. 37,188, which had been utilised by Veena Agarwal for purchase of a Fiat car had been given to her as a provision for dowry at the time of marriage and, therefore, not liable to gift-tax. 6. I have very carefully considered the facts of the case and the submissions made in support of rival standpoints of view. The decisions relied upon by the learned authorised counsel of the assessee and the relevant provisions of the Gift-tax Act, 1958 have also been equally carefully perused by me. The undisputed position under the Hindu Law is that an unmarried daughter who is a member of the HUF has a right to be maintained and get married. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eing the factual position, the assessee's case does not fall within the scope of decided cases on which reliance has been placed by the learned authorised counsel of the assessee. In the cases decided by the Hon'ble High Courts in Bandlamudi Subbaiah's case and M. Radhakrishna Gade Rao's case and similarly in the decision of Madras Bench of the Income-tax Appellate Tribunal in K. SP. S. KT. Kalyappa Chettiar (HUF)'s case, the facts were significantly different in as much as in those cases it was found as a fact by the Appellate Tribunal that the assignment, settlement or transfer had been specifically made for the maintenance or marriage of the unmarried female members. In the present case the gift took place when policy No. 6070852 was assigned to Veena Aggarwal for love and affection on26-4-1974and, therefore, the GTO was justified in assessing it in the asst. year 1975-76. The order of the ITAT in the assessee's own case relating to its income-tax assessment for the Asstt. Year 1976-77 does not in any way affect the finding of the GTO in view of the aforementioned facts, which clearly show that the assignment of the policy had not been made in discharge of any legal obligation b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7,188 was a provision for marriage and not liable to gift-tax or else the amount falls into the ambit of definition of gift as contained in section 2(xii) of the Gift-tax Act, 1958 ?" 2. The brief facts necessary to appreciate the controversy in this case are that one Shri Parma Nand Aggarwal assessed to income-tax in the status of HUF filed on17-3-1980a return of gift showing nil taxable gift. In response to the notice issued by the Gift-tax Officer, the assessee's representative appeared before the Gift-tax Officer. The Gift-tax Officer noticed that the assessee Shri Parma Nand Aggarwal HUF made a gift of Rs. 37,188 to Miss Veena Aggarwal, the unmarried daughter of Shri Parma Nand Aggarwal by assigning the amount to be received on the maturity of a Life Insurance Policy. Though this appears to be a gift pure and simple, the contention of the assessee before the Gift-tax Officer was that this was amount given to Miss Veena Aggarwal as and by way of provision for her marriage and consequently this could not be deemed as a gift within the meaning of section 2(xii) of the Gift-tax Act as there was consideration for the amount made over to Miss Veena Aggarwal, namely, discharge of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emed to have been given in discharge of the obligation of meeting the marriage expenditure of the unmarried daughter and not by way of gift out of pure love and affection. The Appellate Asst. Commissioner considered these aspects and held that even though the policy was assigned in favour of the daughter before her marriage, since the amount was utilised by her for the purchase of a Fiat car, which was held to be part of the dowry, there was no gift within the meaning of section 2(xii) of the Gift-tax Act. He, therefore, allowed the assessee's appeal. 4. Aggrieved by the order the department has come up in a further appeal before the Tribunal. The contention of the Revenue before the Tribunal was that the Appellate Asstt. Commissioner was not justified in holding that the amount of Rs. 37,188 was a provision made for marriage and therefore not liable to gift-tax. 5. The learned Judicial Member came to the conclusion on the facts of this case that there was no gift within the meaning of section 2(xii) of the Gift-tax Act, that the assignment of the Life Insurance Policy, which was supported by the funds of the joint family, was made over to Miss Veena Agarwal, another member of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etter is reproduced in his order and it is in the following terms : "MTY : DO : RLC dated 10/12-3-1979 Dear Sir, Re : Pol. No. 6070852-fvg. Shri Perma Nand Aggarwal and Smt. Kamla Aggarwal. We are in receipt of your letter No. CC/XIV/78-79/616 dated8-3-1979. As desired in your letter under reference we give below the required information : 1. The captioned policy was taken by Shri Parma Nand Aggarwal and Smt. Kamla Aggarwal in the joint name with date of commencement20-5-1959. 2. It was joint life endowment policy for 15 years with profit for the sum assured of Rs. 30,000..3. The policy was absolutely assigned on26-4-1974to the daughter of the lives-assured as a gift (Miss Veena Aggarwal age 23) in consideration of natural love and affection. Yours faithfully, SD/- Sr. Divisional Manager". This letter was on record of the Income-tax Officer. I say so because at the time of the hearing of this appeal this file was shown to me. But this letter was not relied upon either by the Gift-tax Officer or by the Appellate Asstt. Commissioner or by the learned Judicial Member. It did not form part of the Income-tax Appellate Tribunal record. This letter was never referred to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is letter and relied upon it for his conclusion, it was not an irregular act that he had done. The proceedings before the Tribunal had not come to a close till the final order was passed and it was open to the Members to call for the records and look into them and if by not giving an opportunity to the other side, an irregularity in law had been committed, that irregularity would not vitiate the order passed because a supervening illegality could always be cured by taking suitable action. Now that it was found that the letter dated 10/12-3-1979 relied upon by the learned Accountant Member was not put to the assessee earlier, the matter could be sent back to the regular Bench to give a hearing to the matter again after putting this letter to the assessee. Either with or without the letter, the conclusion according to him, is inescapable that the assignment of the policy made on26-4-1974was not pursuant to an obligation cast upon the head of the family to marry the unmarried daughter but it was a pure and simple gift. There was a prescribed form by the Life Insurance Corporation for assignment of policies and the proforma policy showed that the assignment of policy can take place onl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Chambers and ask for any records even if it is for clarification of any doubt. This is opposed to the principles of natural justice and fair hearing and this is also what exactly had been held by the Supreme Court in the case of Dhakeswari Cotton Mills Ltd. If a Member after hearing the case seeks any clarification, he should allow an opportunity to the other side to explain the point and in case any further evidence is collected, that evidence must necessarily be put to the other side and the other side must be given an opportunity to explain. For this purpose the case must be reposted with the concurrence of the other Member. Otherwise this would amount to collecting evidence behind the beck of the party and the decision so given would be a vitiated decision, not in conformity with the accepted principles of natural justice. Since now it is an admitted fact before me that the learned Accountant Member had called for the records after the hearing is over and relied upon a letter, which was never put to the assessee nor relied upon by the department during the course of hearing before the Tribunal, he should have in all fairness reposted the case for hearing. By this process he has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is also to be noted that no assignment of a policy can be enforced against the Life Insurance Corporation unless a notice in writing of the assignment and the policy bearing the assignment or the assignment deed in original are delivered to the Corporation and duly registered by the Corporation. It is only when these formalities are completed that the Life Insurance Corporation accepts the assignment and renders itself liable to make over the proceeds of the policy to the assignee. Since assignment is a contract involving a transfer, there should be valid consideration present as in the case of any other contract to be enforceable. Therefore the consideration for assignment of an insurance policy as per this form is natural love and affection. There may be various reasons and causes fostering love and affection between two persons. It is therefore clear that the natural love and affection is recognised as a valid consideration for a transfer and though for the purpose of a gift natural love and affection can be taken as a consideration, that natural love and affection cannot be considered as an adequate consideration in order that the gift so made could be put outside the ambit o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed, it has to be held based upon the phraseology in the assignment form that the gift was made out of natural love and affection and not by way of a provision made for the marriage expenses of the unmarried daughter. This is what appeared to be the truism in this case. 9. It may be true that the Tribunal had held in income-tax proceedings that the value of the car could be regarded as part of the dowry but that observation was made in the context of ascertaining the amount spent in the marriage. The question before the Tribunal at that time was whether the marriage expenses shown and estimated were reasonable or not. To assess the reasonableness of the marriage expenditure, the Tribunal took into consideration the value of the motor car and then held that the value of the motor car could also be regarded as part of the dowry and in that view the estimate made by the department towards marriage expenses was unreasonable. That does not mean that the Tribunal was holding as a fact by applying its mind to this aspect that the car was given as a gift in contemplation of marriage in discharge of the obligation cast upon the assessee to meet the marriage expenditure of Miss Veena Agarwa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be said that the properties were given to the unmarried daughters voluntarily and without consideration in money or money's worth. Thus the Andhra Pradesh High Court held that the provision made could not be considered to be a gift within the meaning of section 2(xii) of the Gift-tax Act. In order that this decision should apply, as I pointed out earlier, there ought to be some evidence connecting the assignment of the policy to the provision made for meeting the marriage expenditure of the unmarried daughter. Since I do not find any such evidence, I am inclined to agree with the view expressed by the learned Accountant Member, even though he chose to rely upon a document which he collected after the hearing was over in his Chamber with out giving any opportunity to the other side to express their comments on this letter. I feel that as a Third Member my role under the law is confined to expression of opinion on the point referred to the Third Member but not to give a direction to the Bench in any manner. A direction can be given to the Bench only when the Third Member exercise either appellate or revisional jurisdiction. The Income-tax Act does not revisional jurisdiction. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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