TMI Blog2002 (12) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... the purview of the Gift-tax Act?" - We answer both the questions of law referred to us in the affirmative, against the Revenue and in favour of the assessee. - - - - - Dated:- 10-12-2002 - Judge(s) : N. V. BALASUBRAMANIAN., K. RAVIRAJA PANDIAN. JUDGMENT The judgment of the court was delivered by N.V. BALASUBRAMANIAN J.- This is a reference under the Gift-tax Act, 1958, and in pursuance of the direction of this court, the Income-tax Appellate Tribunal has stated a case and referred the following questions of law for our consideration: "1. 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 transaction by which a self-acquired property of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... son of the assessee was entitled to life interest in the lodge building situate in the first floor of the property, "SRM Lodge", and after him, the same should go to his male children. On April 16, 1987, the assessee executed a deed of partition, at the intervention of the panchayatdars, with a view to settle the dispute with her son and under the deed of partition, the assessee was allotted the property at Door No. 29, Pumping Station Road, Erode, absolutely. She was also granted the life interest both in the shops in the ground floor and the lodge in the first floor of the building, "SRM Lodge", which should go to her son absolutely after her death. Under the deed of partition, the son of the assessee was allotted the property at No. 13, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income-tax Appellate Tribunal. The Appellate Tribunal took into account the nature of the dispute in the family of the assessee and the facts of the case and also the circumstances which led to the execution of the partition deed and lease deed, and held that only to solve the family dispute and to bring harmony to the family, the transactions were entered into and there was a family arrangement which did not constitute "gift" within the meaning of sections 2(xii) and 4(1)(a) of the Gift-tax Act. The Appellate Tribunal also held that the transactions were involuntary in nature and therefore there was no question of levy of gift-tax. In this view of the matter, the Appellate Tribunal cancelled the order of assessment for the assessment year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e family settlement must be a bona fide one so as to resolve family disputes and rival claims by a fair and equitable division or allotment of properties between the various members of the family; 2. The said settlement must be voluntary and should not be induced by fraud, coercion or undue influence; 3. The family arrangements may be even oral in which case no registration is necessary; 4. It is well settled that registration would be necessary only if the terms of the family arrangement are reduced into writing. Here also, a distinction should be made between a document containing the terms and recitals of a family arrangement made under the document and a mere memorandum prepared after the family arrangement had already been made e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y so as to preserve the family property, the peace and security of the family, avoidance of family dispute and litigation and also for saving the honour of the family. Such an arrangement is based on the assumption that there was an antecedent title in the parties and the agreement acknowledges and defines what that title is. It is for this reason that a family arrangement by which each party takes a share in the property has been held as not amounting to a 'conveyance of property' from a person who has title to it to a person who has no title." The Supreme Court in the case of Lakshmi Ammal v. Chakravahthi, AIR 1999 SC 3363 has laid down the basic features of a family arrangement. Applying the principles laid down by the Supreme Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty by a member would be sufficient to validate the family arrangement. It is clear from the facts of the case that the assessee had recognised the rights in favour of her son in the property allotted in his favour in the partition. The Supreme Court in Lakshmi Ammal v. Chakravahthi, AIR 1999 SC 3363 has held that it is not necessary that the parties being the members of the family and claiming right in the property are in law entitled to some share and once the basic features of family arrangement are present, viz., disputes have been raised by the parties and settled in a panchayat and the parties have also been put in possession of the property in question, the document should be held to be a valid family arrangement, though the documen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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