Hindu family partition and gift-tax: excess allotment on bona fide metes-and-bounds division was not a taxable gift.

A bona fide partition of Hindu undivided family property by metes and bounds, following severance in status, is not a transfer of property for gift-tax purposes because each coparcener merely works out antecedent rights in the joint property rather than receiving property by a donor-donee transfer. The extended definition of transfer in section 2(xxiv)(d) was held not to cover such a partition, and the deeming provisions in section 4 were inapplicable on the facts. Section 20 did not change the position because the joint family is treated as continuing until partition by metes and bounds is recognised. The excess allotment to the son and grandsons was therefore not a gift and was not liable to gift-tax.

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Issues: Whether the allotment of a larger share to the assessee's son and grandsons in a Hindu undivided family partition amounted to a gift exigible to gift-tax under the Gift-tax Act.

Analysis: A partition in a Hindu joint family first brings about a severance in status and then a division by metes and bounds. In such a partition each coparcener works out rights flowing from antecedent title to the whole family property, and the process is one of mutual relinquishment and acknowledgment rather than a transfer of property from one person to another. The extended definition of "transfer of property" in section 2(xxiv)(d) was held not to fit a bona fide partition by metes and bounds, since the arrangement did not amount to a transaction by a person diminishing his own property in favour of another within the donor-donee concept underlying the Act. The deeming provisions in section 4 were also held inapplicable on the facts, and section 20 did not alter the position because, for the purposes of the Act, the joint family continues until partition by metes and bounds is recognised.

Conclusion: The excess allotment on partition was not a gift and was not liable to gift-tax; the answer was in favour of the assessee.

Ratio Decidendi: A bona fide partition of joint family property by metes and bounds, following a severance in status, is not a transfer of property and does not constitute a gift for the purposes of gift-tax unless the statute clearly and unambiguously brings such a transaction within its charging provisions.

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