Natural guardian limits defeat alleged loan to minors, so shares in their names remained includible in net wealth.

Where a mother, during the father's lifetime, purported to advance funds to her minor sons and acquire shares in their names, the arrangement was not legally valid because she had no capacity to act as their natural guardian for that purpose under the Hindu Minority and Guardianship Act. The alleged loan could not create an enforceable liability against the minors, and the accounts and investments standing in their names were treated as the assessee's own assets. As the transfer lacked legal substance, the value of the shares could not be excluded from the assessee's net wealth and was includible in the wealth assessment.

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Issues: Whether the value of shares purchased in the names of the assessee's minor sons could be excluded from the assessee's net wealth on the footing that the amounts used were advanced as valid loans to the minors and that the assessee could act as their natural guardian for that purpose.

Analysis: The arrangement was examined in the light of the Hindu Minority and Guardianship Act, under which the father is the natural guardian of a Hindu minor boy and the mother has no such capacity while the father is alive unless duly appointed by court. A mother could not, in law, create a liability against the minors by treating herself as their natural guardian and simultaneously advancing money to herself in her individual capacity. The alleged loan transaction therefore lacked legal validity, and the accounts and investments standing in the names of the minor sons were treated as the assessee's own accounts and assets. In consequence, the basis for excluding the shares from net wealth by treating the transfer as a genuine loan failed.

Conclusion: The alleged transfer to the minor sons was not a valid transaction in law, and the value of the shares was liable to be included in the assessee's net wealth.

Final Conclusion: The reference was answered against the assessee and in favour of the Revenue, with costs.

Ratio Decidendi: Where the mother has no legal capacity to act as natural guardian during the father's lifetime, an alleged loan by her to her minor children cannot be treated as a valid transfer creating enforceable liability or excluding the underlying assets from her wealth assessment.

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