Absolute settlement of corpus under Muslim law nullifies inconsistent restrictions and makes later transfers taxable gifts.

A deed that, on its true construction, transfers the corpus of property absolutely under Muslim law cannot be cut down by clauses prohibiting alienation or directing devolution after the donee's death. Such restrictions are repugnant and void, while a limited interest may be created only in the usufruct. On the terms of the 1953 settlement, the assessee therefore took absolute ownership of the properties, and the later gift-over provisions in favour of his children were ineffective. The assessee's 1969 settlements in favour of his children were accordingly treated as taxable gifts under the Gift-tax Act.

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Issues: Whether the deed of settlement of 5 August 1953 conferred only a life interest on the assessee or an absolute gift of the corpus, and whether the later settlements by the assessee in favour of his children were liable to gift-tax.

Analysis: The document was construed on its own terms and showed that the settlor settled the properties in favour of the assessee during his lifetime, prohibited alienation, and provided that after his death the properties would pass to his children. Applying the settled principles of Muslim law, the Court held that a gift of the corpus carries absolute dominion and any condition inconsistent with that dominion is repugnant and void. A limited interest may be created only in the usufruct, but the deed here did not reserve the corpus for the children existing on the date of settlement. The later clauses for devolution upon the assessee's children were therefore ineffective, and the assessee took the properties absolutely. The cases relied on by the assessee were distinguished on the ground that they involved reservation of usufruct or different deed terms, while the deed in question effected an absolute settlement of the corpus.

Conclusion: The 1953 deed conveyed the corpus absolutely to the assessee, the restrictions and gift-over clauses were void, and the assessee's 1969 settlements to his children were taxable gifts under the Gift-tax Act.

Ratio Decidendi: Under Muslim law, where a deed on its true construction conveys the corpus of property absolutely, any restriction on alienation or gift-over creating a life estate or remainder is repugnant and void, and the donee is treated as the absolute owner for gift-tax purposes.

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