TMI Blog1996 (2) TMI 44X X X X Extracts X X X X X X X X Extracts X X X X ..... ---------------------------------------------------------------------------------------- T. C. No. Assessment T. C. No. Assessment T. C. No. Assessment year year year -------------------------------------------------------------------------------------------------------------------------------------------------- 1557 of 1986 1973-74 1468 of 1982 1973-74 1885 of 1984 1975-76 1469 of 1982 1974-75 873 of 1985 1973-74 1470 of 1982 1975-76 874 of 1985 1974-75 1471 of 1982 1976-77 875 of 1985 1976-77 314 of 1983 1977-78 1802 of 1986 1977-78 671 of 1985 1980-81 1803 of 1986 1978-79 849 of 1987 1979-80 --------------------------------------------------------------------------------------------------------------------------------------------------- The following necessary facts have also to be stated before actually adverting to the abovesaid short point : The accounting year in relation to each assessment year is the year ended on April 12. On April 1, 1973, the karta of the assessee-Hindu undivided family made a written declaration of partial partition before the notary. There, it was declared that the minor daughters of the karta, who are six in number, then aged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mily along with the said karta, who is the only sole surviving coparcener), having taken out the said sums, totalling Rs. 3,60,000, in all, from out of the capital account of the Hindu undivided family which has immovable business of pawn broking and money-lending and investment in firms to a separate account. The question, which has been actually referred to us in Tax Case No. 1557 of 1986 is as follows : " Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in holding that the transfer of Rs. 60,000 by the assessee, to each of his six minor daughters was a family arrangement and, therefore, the transfer would not amount to a gift, within the meaning of section 2(xii) of the Gift-tax Act ? " In the earliest of the orders of the Tribunal, in these tax cases, which is dated April 16, 1981, out of which Tax Cases Nos. 1468 to 1471 of 1982 have arisen, the Tribunal after holding that there is no gift chargeable to gift-tax, alternatively held thus : "if not a gift, it is a family settlement or arrangement, by which Rs. 3,60,000 has been transferred from the Hindu undivided family to the minors ". In the other order of the Tribunal dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the transfer of Rs. 60,000 by the assessee to each of the six minor daughters of the assessee, was family arrangement or was in discharge of the legal obligation of the assessee family towards the said daughters and, therefore, the transfer would not amount to a gift within the meaning of section 2(xii) of the Gift-tax Act ? " Accordingly, we answer the abovesaid question, as reframed, in the affirmative and in favour of the assessee. Here, we must also mention that so far as the abovesaid gift-tax question is concerned, even learned senior counsel for the Revenue, while arguing the tax cases relating to income-tax, has himself, represented that the question referred to us in Tax Case No. 1557 of 1986 relating to gift-tax, has to be answered in favour of the assessee. No doubt, for saying so, the said counsel had a different reasoning, viz., that the abovesaid "giving" of Rs. 60,000 to each of the minor daughters would not be a valid gift, chargeable to tax since at the time when the said sums were given, admittedly, there was no cash balance to the extent of Rs. 3,60,000 available with the assessee-family and what was available as cash balance was only Rs. 7,361. For this reas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,000 and the company was not a banking company and had no overdraft facility with any bank and, therefore, there were no existing goods to be parted with. The net result was, the Supreme Court held that the sum of Rs. 1,50,000 had to be included in the respondent's net wealth. Thus, in the abovesaid Supreme Court case, the proposed transaction was a gift or a transfer without consideration. Only in that context, in the light of the requirements relating to the law of gifts, the Supreme Court observed that there was no valid gift. But, in the present case, on the basis of the factual finding of the Tribunal, as stated above, the abovesaid transfer of Rs. 60,000 to each of the minor daughters was for consideration, that is, for discharge of the abovereferred to legal obligation of the assessee-family in favour of the minor daughters. In the circumstances, the said Supreme Court decision will have no application to the present case. Learned senior counsel for the Revenue also could not cite any similar decision in relation to a transfer with consideration. Now, coming to the common question of law referred to us in the abovereferred Tax Cases Nos. 1468 to 1471 of 1982, it is as foll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y business with interest accruing thereon. So, in the present case, there is no difficulty in holding that section 36(1)(iii) deduction should be granted. Accordingly, the above questions in Tax Cases Nos. 1468 to 1471 of 1982, Tax Case No. 314 of 1983 and Tax Case No. 671 of 1985 are answered in the affirmative and in favour of the assessee. Now, coming to the wealth-tax cases, the common question referred to us in Tax Cases Nos. 873 to 875 of 1985 is as follows : " Whether, on the facts and in the circumstances of the case, the Appellate Tribunal has rightly held that the amounts of Rs. 3,61,080, Rs. 3,88,161 and Rs. 4,04,330 are not includible in the wealth of the assessee for the assessment years 1973-74, 1974-75 and 1976-77, respectively ? " Likewise, the common question referred to us in Tax Cases Nos. 1802 and 1803 of 1986, is as follows : " Whether, on the facts and in the circumstances of the case, the Appellate Tribunal has rightly held that the amounts of Rs. 3,53,694 and Rs. 3,74,916 are not includible in the wealth of the assessee for the assessment years 1977-78 and 1978-79, respectively ? " Similarly the question referred to us in Tax Case No. 1885 of 1984 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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