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TMI Blog1987 (12) TMI 84X X X X Extracts X X X X X X X X Extracts X X X X ..... on 25th May, 1970 the terms of which would be relevant and would be subsequently referred to in this order. In pursuance of the illatom adoption, runs the case of the assessee that Smt. Ramasubbamma was given in marriage to Sri Dayakar Reddy on 2nd November, 1973. Smt. Suharlata the second daughter of Sri M. Adinarayana Reddy was given in marriage to Sri Y. Adisesha Reddy on 13th Dec., 1973. It is the case of the assessee that at the time of her marriage with Sri Y. Adisesha Reddy, her father Sri Adinarayana Reddy promised to give her 3 Acs. of wet land and 8-1/2 Acs. of dry land towards 'pasupukunkuma'. 3. In 1974 one Smt. Y Sarojanamma of Sirsanambedu village near Naidupet, Nellore District, filed a suit against Sri M. Adinarayana Reddy claiming half the share in his properties on the ground that she had lived with him from 1970 to 1973 and during that period she rendered all sorts of services to him, in consideration whereof, he promised to give her half share in his property. Sri M. Adinaryayana Reddy, donor-assessee, actually died on 12th Sep., 1976. Prior to his death he settled his properties to his wife, two daughters and two sons-in-law by means of the Registered Settlem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Land Tribunal in connection with the land ceiling proceedings pending at that time. The GTO first pouncing upon the fact of the illatom adoption agreement held that the document was executed on a plain paper and was not registered and it was executed three years prior to the marriage. The GTO also held that on verification of the concerned provisions of Hindu Law and the commentaries thereon, it is found that the illatom agreement does not give any actionable right to the illatom son-in-law. In support of this finding a passage in N.R. Raghavacharis Hindu Law Commentary was relied upon which is as follows: "By the illatom affiliation, the adopter does not deprive himself of his absolute power of disposing of his property in any way he likes, and hence the illatom son is not entitled to interdict the adopter's alienation on the ground that it is unauthorised." The GTO held that the legal position having been expounded in the above passage the settlements in favour of both the illatom son-in-law as well as Smt. Ramasubbamma cannot be taken to be either family settlement or arrangement and so they should be taken to be subjected to gift-tax. The fact that the same extent was settle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aw Rs. 24,572 x 2 = Rs. 49,144 Gifts to 2 married daughters 24,572 x 2 = Rs. 49,144 Gifts to wife to Rs. 21,140 was exempt . under s. 5(1)(viii) . Rs. 98,288 Less : Basic Exemption Rs. 5,000 TAXABLE GIFT Rs. 93,288 or Rs. 93,290 Thus the GTO computed the value of the total taxable gift at Rs. 93,290 by his assessment order dt. 30th March, 1981. 4. Aggrieved against the assessment order the assessee went in appeal before the AAC. He held by his impugned order that under Hindu Law Sri V. Dayakar Reddy was entitled to half share of the property of Shri M. Adinarayana Reddy even during his life time. He relied upon the Mayne's Hindu Law and Usage, 11th Edition Page 280 Paragraph 228. He also relied upon the AP High Court's decision in the case of Peechu Ramaiah vs. Government of Andhra Pradesh (1976) 2 APLJ 278 wherein it was held that custom of illatom adoption was prevalent among Reddy and Kamma castes. The illatom adoption consisted in the affiliation of a son-in-law in consideration of assistance in the management of family property. No religious significance is attached to the act. Neither execution of document nor performance of any ceremony is necessary. It nee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appeal filed before him. 6. Aggrieved against the impugned order passed by the AAC the Department came up in second appeal before this Tribunal and thus the matter stands for our consideration. In the grounds of appeal the Revenue took up the position that the AAC erred in holding that there is no element of gift in a settlement made in favour of Shri Y. Dayakar Reddy, illatom son-in-law and Smt. Ramasubbamma, daughter. So also, the AAC erred in holding that there is no element of gift in the case of Smt. Suharlata and ultimately it was contended that ordering exclusion of Rs. 73,716 from out of the total taxable gift of Rs. 93,290 determined by the GTO is erroneous and should be set aside. 7. We have heard Shri D.S. Prasad Reddy, learned counsel for the assessee and Shri K.K. Viswanatham, learned Departmental Representative. On behalf of the assessee two paper compilations were filed, the first comprising 74 pages and the second comprising 25 pages. The Department also filed a paper books containing 9 pages. The learned Departmental Representative contended that the whole property held by the donor Shri Adinarayana Reddy was ancestral property in his hands, whereas, the do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... int whether the gift deed in his favour is valid or not. According to us for two reasons it was valid. Firstly because in the Land Revenue Appellate Tribunal proceedings when the matter went up to the High Court, the Hon'ble High Court in CRP Nos. 630 and 631 of 1982 by their judgment dt. 11th Feb., 1987 held that illatom adoption agreement was held to be established and that as per the terms of the agreement Sri Y. Dayakar Reddy was entitled to half the property of his father-in-law and therefore, the Hon'ble High Court directed that half the property as per the agreement dt. 25th May, 1970 should be included in the holding of Shri Y. Dayakar Reddy. In the said order of the AP High Court the lower Tribunals following the case of Sri C. Narayanappa and Ors. vs. State of AP (1978) APLJ 60 held that after the advent of the Hindu Adoptions and Maintenance Act the question of illatom adoption does not arise and such an illatom adoption could not be given effect to. However, the Hon'ble High Court (Justice Seetharama Reddy) held that the said decision was overruled by a subsequent division bench of the very same High Court. It is contended by the learned Departmental Representative that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the matter (the judgment dt. 11th Feb., 1987 in CRP Nos. 630 and 631 of 1982) was taken in further appeal either to the full bench or to the Supreme Court. Therefore, it must be taken to have become final and accordingly we have to hold that the illatom agreement dt. 25th May, 1970 was true and established and according to it half the property held by the donor must belong to the illatom son-in-law, Sri Y. Dayakar Reddy. It was never the case of the assessee that there was any partition between the father-in-law and the first son-in-law during the former's life time. Therefore, afortiori it shows that half the property is covered by the gift deed in favour of Sri Y. Dakayar, were the own properties of Sri Y. Dayakar Reddy. The other undivided half only belongs to the donor Sri M. Adinarayana Reddy. It was not the case of the Revenue that the gift deed was invalid under any of the provisions of the AP Land Reforms (Ceiling on Agricultural Holdings) Act, 1963. Even if the illatom agreement dt. 25th May, 1970 is to be disregarded then also, the gift in favour of Sri Y. Dayakar Reddy should be held to be valid as Shri M. Adinarayana Reddy is entitled to absolutely dispose of half the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... This was never the case put forward before any of the lower authorities. This argument is not a pure legal argument. The question of benami is always a mixed question of fact and law and for the first time ordinarily we would be aversed to allow any question of fact being looked into at our stage. Therefore, we refuse to entertain this argument for the first time before us. 9. Now let us consider the validity of the gift deeds dt. 26th Sep., 1973 in favour of Smt. Ramasubbamma and Smt. Suharlata. As far as these gift deeds are concerned it was vehemently contended by the learned departmental Representative that their marriages took place in 1973 whereas, the gifts were made in 1976 three long years after their marriages. The gifts were purported to have been made in pursuance of the promises made by Sri Adinarayana Reddy to give some properties to his daughters towards their 'Pasupu Kunkuma' and in fulfilment of that promise these documents were executed. The learned Departmental Representative argued that it is hard to believe this sort of stories. If really the gift deeds were intended as gifts in fulfilment of the promises made at their marriages these would have been made imme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sfer, attracting s. 2(xii) of the GT Act, but is a family settlement". 10. In this case Shri Adinarayana Reddy was divided from his other coparceners and the whole property held by him represented ancestral property. Sri M. Adinarayana Reddy filed a declaration along with his wife claiming to be holding 14 acres 22 cents of single crop wet land and another extent of 2 acres 72 cents under one source and also 51 acres 61 cents of dry land. Shri Adinarayana Reddy was held to be having a total extent of 2.2893 standard holdings as per the Land Reforms Tribunal, Nellore, in CC Nos. 172 and 173/GDR/75 by its order dt. 9th Nov., 1979. The land Reforms Tribunal on the other hand determined the total extent at 2.2172 standard holdings and the legal representative of Shri Adinarayana Reddy was asked to surrender 1.217 standard holdings. We have already adverted to the High Court's order declaring that the illatom son-in-law had half share in the total holdings held by Shri Adinarayana Reddy under the terms of illatom adoption deed dt. 25th May, 1970. In view of all the above it is easy for us to conclude that the gifts made are reasonable and they are in consideration of the promises made ..... X X X X Extracts X X X X X X X X Extracts X X X X
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