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TMI Blog2002 (12) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... n by which a self-acquired property of the assessee was alienated in favour of her son by way of a partition deed is only a family arrangement and, therefore, is outside the purview of the Gift-tax Act? 2. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is right in law and also had valid materials in holding that the transaction by which the assessee leased out the properties to her husband and two daughters at a lease rent which is far below the annual income of the property is only a family arrangement and is outside the purview of the Gift-tax Act?" The assessee is an individual and the assessment year with which we are concerned is 1988-89. The assessee is the owner of a half share in the building kn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was allotted the property at No. 13, Pumping Station Road, Erode. On August 1, 1987, the assessee along with her son executed a deed of lease in respect of the properties; (i) No. 29, Pumping Station Road, Erode, (ii) Ground Floor in SRM Lodge, and (iii) No. 13, Pumping Station Road, Erode, in favour of the assessee's husband and her two daughters for a sum of Rs. 16,000 per annum for a period of eight years. The Gift-tax Officer was of the view that by the partition deed dated April 16, 1987, the property at No. 13, Pumping Station Road, Erode, absolutely belonging to the assessee was allotted to the assessee's son which involved a gift of Rs. 1,50,000 being the value of the property. He also held that the lease amount fixed was much lowe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment for the assessment year 1988-89 levying gift-tax and allowed the appeal preferred by the assessee. Against the order of the Appellate Tribunal, the Revenue sought for a reference and the Appellate Tribunal, on the basis of the directions of this court, referred the questions of law mentioned above. The assessee was served, but, in spite of that, there is no representation for the assessee. Mrs. Pushya Sitharaman, learned senior standing counsel appearing for the Revenue, submitted that the Appellate Tribunal was not correct in holding that there was a family arrangement and according to her, the assessee was the owner of the property at No. 13, Pumping Station Road, Erode, and the property was transferred in favour of the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement had already been made either for the purpose of the record or for information of the court for making necessary mutation. In such a case the memorandum itself does not create or extinguish any rights in immovable properties and therefore does not fall within the mischief of section 17(2) (sic) (section 17(1)(b)?) of the Registration Act and is, therefore, not compulsorily registrable; 5. The members who may be parties to the family arrangement must have some antecedent title, claim or interest even a possible claim in the property which is acknowledged by the parties to the settlement. Even if one of the parties to the settlement has no title but under the arrangement the other party relinquishes all its claims or titles in favour of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Supreme Court in the above cases, it is clear that the assessee's husband was declared an insolvent and after that, the assessee along with her son carried on the business and acquired certain properties. Though one of the properties was acquired in the joint names of the assessee and her son, a dispute seems to have arisen and it is stated that the assessee's son was a chronic drunkard and he was picking quarrels in the family and he ultimately died on November 8, 1990 when he was 38 years old. The Appellate Tribunal held that the conduct of various members of the family showed that the family members intended to maintain peace in the family and to bring harmony in the family and they also wanted to avoid possible disputes by the h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt, though the document may be termed as a deed of partition. It is also well settled that it is not necessary that the arrangement should be among all the members of the family arrayed one against the other and the prime factor is that it should be in the interest of the family (vide: Mulla's Principles of Hindu Law (18th edition, Volume I), paragraph 248B at page 446). We find that the Appellate Tribunal has found that there was a bona fide family arrangement to resolve the family dispute and the principle laid down by the Supreme Court in Kale's case, AIR 1976 SC 807, is that the antecedent title of the son must be assumed and the family arrangement should be upheld. We, therefore, hold that the fact that there was a panchayat in which ..... X X X X Extracts X X X X X X X X Extracts X X X X
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