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TMI Blog1983 (7) TMI 13X X X X Extracts X X X X X X X X Extracts X X X X ..... son, Jayaprakasam, and his daughter, Seethalakshmi Ammal, should take their respective items of properties marked for them as their absolute properties after the lifetime of himself and his wife. Earlier to that, he had executed two gift deeds on January 29, 1969, four gift deeds on January 30, 1969, two gift deeds on February 1, 1969, and two gift deeds on February 2, 1969, in respect of his other immovable properties in favour of Bhavani Subbulakshmi, Janardhanan, Selvarani, Seethalakshmi and Devagi Ammal, who are the grandchildren and daughters of the assessee. Coming to know of the above gifts, the GTO issued a notice to the assessee requiring him to file a return of all the gifts made by him during the previous year relevant to the assessment year 1969-70. While filing the return disclosing the value of the gifts as Rs. 1,50,000, the assessee claimed that the settlement deed dated February 11, 1969, in favour of his wife was exempt under s. 5(1)(viii) of the G.T. Act. The impugned question relates to the interpretation of that registered document dated February 11, 1969. The GTO was of the view that the document is a gift deed and not a will. The appeal filed by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to be only a will and not a gift deed. On a careful reading of the document, it is clear that so far as the creation of the life interest in favour of the assessee and his wife is concerned, there is a creation of a present life interest in favour of the wife, who had prior to the document no manner of interest, since the assessee is the exclusive owner of the said properties. This position is not disputed by the Revenue. Section 5(1)(viii) and (x) of the I.T. Act provides as follows " 5. (1) Gift-tax shall not be charged under this Act in respect of gifts made by any person (viii) to his or her spouse, subject to a maximum of Rs. 50,000 in value in aggregate in one or more previous years, the expression ' spouse' in this clause, where there are more wives than one, meaning all the wives together. (x) under a will." A combined reading of cls. (viii) and (x) of s. 5(1) will clearly indicate that if a gift is made by any person in favour of the spouse under gift deed or will, the said gift is not taxable with the difference that the gift made under the gift deed is restricted to a maximum of Rs. 50,000, whereas for a gift made under a will, there is no such restriction in the v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... correct in law, when it is found that the transfer of interest is directed to take effect only after the lifetime of the executant, as the executant has not deprived himself of his interest in the property during the interval, since it is open to him to dispose of any property before the vesting date. It is because of such a situation, the document can be treated only as a will and not as a gift deed. If the document is gift deed, there should be a present vesting of interest though the entering into possession and enjoyment of the property may be postponed to a later date. In an identical case that came up before a Division Bench of this court and reported in CGT v. Thiruvenkata Mudaliar [1977] 107 ITR 661, it was held that where a document styled and registered as a settlement deed containing similar recital of devolution of interest in the properties to vest in the sons on the death of the settlor after the lifetime of the settlor is only a will and not a gift deed. It was held by the Division Bench that the nomenclature given by the parties to the transaction in question is not decisive and that there being no provision in the document for transferring any interest in the imm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h High Court, the document had been styled as a settlement deed, a life interest was created for the lifetime of the assessee and there was a gift of vested remainder in favour of the assessee's son. The document has been inter vivos in favour of the son. But in the present document dated February 11, 1969, the document is executed only in favour of the spouse and not in favour of the daughter and grandchildren as observed at page 251 of the case reported in Vadulla Venkata Rao v. CGT [1972] 85 ITR 249 (AP), in which s. 122 of the Transfer of Property Act is extracted as follows : " 122. 'Gift' is the transfer of certain existing movable or immovable property made voluntarily and without consideration, by one person, called the donor, to another, called the donee, and accepted by or on behalf of the donee." The impugned document is executed in favour of the spouse as the donee and the spouse alone could have accepted the gift of life interest made in the document. The daughters and grandchildren of the assessee have not been mentioned as the donees and the very recitals would indicate that there was no occasion or circumstance for them to accept any gift under the said document. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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