TMI Blog2000 (9) TMI 245X X X X Extracts X X X X X X X X Extracts X X X X ..... ther heir to the deceased. Accordingly, the assessee inherited all the property of the deceased Shri Himmatmal. On 3-6-1982, Smt. Sushilabai took in adoption her nephew Shri Harakchand as per the custom of the Jain community. In support of the said adoption, Adoption Deed dated 8-6-1982 was drawn and was filed before the GTO. The Deed records that the assessee Smt. Sushilabai has adopted her nephew Shri Harakchand for which she had obtained the consent of the natural parents Shri Phulchand and Smt. Kanchanben. Accordingly, the adoption was performed in the presence of the family members and according to the custom of the community and the adoption was completed on 3-6-1982. On adoption, Smt. Sushilabai had declared that Shri Harakchand be considered as the adopted son of Shri Himmatmal and carry on as if he is the son of her husband Shri Himmatmal. It was further declared by her that as a result of the adoption, the said Shri Harakchand had all such rights as a son of Shri Himmatmal. 4. On 5-6-1982 Smt. Sushilabai took Sanyas (She took Diksha as per Jain religion). This fact was also incorporated in the Adoption Deed, as the Adoption Deed further goes on to state that as a result ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 was considered. The G.T.O. also relied on another decision of the Madras High Court in Kondal Row v. Iswara Sanyasi [1911] 33 MLJ 63 in which essentials of a Sanyasi and its incidents according to Hindu Law have been discussed. 6. The assessee appealed to the Dy. CGT(A). The assessee filed before the learned Dy. CGT(A) new evidence in the form of an affidavit of brother of Smt. Sushilabai and an affidavit of natural father of Shri Harakchand to prove the age of the assessee and Shri Harakchand. The assessee also filed the horoscope of Shri Harakchand and Smt. Sushilabai, copy of LIC policy, receipt of Porwal Jain Sangh, Sheoganj, certificate from school regarding date of birth of Shri Harakchand and certificate from the Secretary of Shri Porwal Jain Sangh, Sheoganj regarding the customs of adoption of any major or married member by the members of Porwal Jain Society and photographs of the Diksha ceremony of Smt. Sushilabai. Before admitting the additional evidence, specific opportunity was given by the ld. Dy. CGT(A) to the G.T.O. who stated that he had no objection for admission of the evidence submitted by the assessee in support of her claim. The Dy. CGT(A) firstly discuss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessment order suffers from the fact that there are no precise reasons given by the G.T.O. to bring to tax the property of Rs.1,90,750. The G.T.O. has merely referred to section 4(1) of the Gift-tax Act but has not referred to specific clauses in this section. From the content of his assessment, it appears that he had in mind provisions of section 4(1)(c). This is because, it is mentioned that there was a transfer by way of relinquishment of rights from Smt. Sushilabai Jain in favour of Shri Harakchand Jain by implication bringing the second transfer within the ambit of section 4(1) of the Gift-tax Act. He drew our attention to section 4(1)(c) which provides that where there is a release, discharge, surrender, forfeiture or abandonment of any debt, contract or other actionable claim or interest in property by any persons, the value of release, discharge, surrender forfeiture or abandonment to the extent to which it has not been found to the satisfaction of the G.T.O. to have been bona fide, shall be deemed to be a Gift made by the person responsible for the release, discharge, surrender, forfeiture or abandonment. He submitted that in the present case, it has not been found as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to disposition as understood in section 2(xxiv) in the definition of the expression 'transfer of property' - refer judgment of the Bombay High Court in CGT v. Mrs. Jer Mavis Lubimoff [1978] 114 ITR 90. Thus, the Gift-tax Act applies only to transactions by which property is transferred by one living person to another by various acts which cannot have any application to transfer of property by provisions of law. For example, when a person dies, his property passes to his legal heirs by provisions of law and for such transmission of property, there could be no liability to Gift-tax. The position has been placed beyond doubt by section 5(1)(x) under which the property passing under a Will is exempted from Gift-tax. It is to be noted that property passing by Will is specifically exempted, while property passing by inheritance on intestate death is not mentioned, obviously because it is a transfer operating by virtue of law. In the case before us, when Shri Himmatmal died, the property passed on to his wife Smt. Sushilabai, the present assessee. She became the owner of the property as per the provisions of law. When she took Sanyas on 5-6-1982, it was a case of civil death, and, there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Tribunal, however, held that the deceased after he became Sanyasi was not under an obligation to maintain his mother and consequently the settlement made by him in her favour was not supported by any consideration and had to be considered as a Gift. The Hon'ble Madras High Court held that in the first place though the deceased was a non-dwij a according to the Dharmapuram Adheenam, he could be regarded as a Hindu sanyasi; the settlement in this case was executed by the deceased after he became Sanyasi and long after he ceased to have any connection with his family. The deceased did not have any right or obligation with reference to any of the members of the earlier family after he became Sanyasi and the settlement executed by him in favour of her mother had to be regarded as a gift. In the assessee's case, however, the adoption was made before the assessee took Sanyas. On her taking Sanyas, there was a civil death of her and her adopted son became owner of her property as a result of legal transmission. There was no act on the part of the assessee after she became Sanyasi to release any property in favour of her son. In fact, on 8-6-1982 when the adoption deed was made, she had ..... X X X X Extracts X X X X X X X X Extracts X X X X
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