1982 (7) TMI 153 - AT - Wealth-tax

Gifted Properties Deemed Individual, Not HUF: Tribunal Upholds Commissioner's Decision

A Seetharamaiah. Versus Wealth-Tax Officer/Income-Tax Officer And Another.

The Tribunal determined that properties received by the assessee through gift deeds were his individual property, not part of his Hindu Undivided Family ... Assessment Year, Minor Child, Previous Year, Share Income Issues Involved:1. Determination of whether the properties received by the assessee through gift deeds were part of his Hindu Undivided Family (HUF) or his individual property.Detailed Analysis:Issue 1: Determination of Property Ownership (HUF vs. Individual)Background:The assessee received properties as gifts from his paternal uncle through three deeds dated 12-9-1952, 29-6-1954, and 6-9-1954. Initially, the Wealth Tax Officer (WTO) accepted the assessee's claim that these properties belonged to his HUF. However, the Commissioner later initiated action under section 25(2) of the Wealth-tax Act, 1957, arguing that the properties were incorrectly assessed as HUF property instead of individual property, which was prejudicial to the interests of the revenue.Assessee's Argument:The assessee contended that the properties were meant for the benefit of his family, as indicated by the term 'putra poutra paramparya' in the gift deeds, suggesting that the properties were intended to be enjoyed by the assessee and his lineal male descendants. The assessee's counsel cited the Supreme Court ruling in C. N. Arunachala Mudaliar v. C. A. Muruganatha Mudaliar [1954] SCR 243 and the Delhi High Court ruling in Raghbir Singh v. Budh Singh AIR 1978 Delhi 86, arguing that the deeds should be construed harmoniously to reflect the donor's intention.Revenue's Argument:The revenue argued that the gift deeds conferred absolute rights of enjoyment, alienation, and disposition to the assessee, indicating that the properties were gifted to him as an individual. The revenue also referenced the Supreme Court ruling in M. P. Periakaruppan Chettiar v. CIT/CWT/CGT [1975] 99 ITR 1, asserting that no coparcenary existed at the time of the gift, and thus, the properties could not be considered HUF property.Tribunal's Analysis:The Tribunal examined the language of the gift deeds and the surrounding circumstances. The key phrases in the deeds were:- DEED DATED 12-9-1952: 'The said vacant site shall be enjoyed by you 'putra poutra paramparaya' with a right to gift, sale, etc.'- DEED DATED 29-6-1954: 'The said vacant site is for enjoyment for you, putra poutra paramparya with absolute rights of sale, disposition and gift.'- DEED DATED 6-9-1954: 'You enjoy the land yourself putra pautra paramparya with absolute rights.'The Tribunal noted that the Supreme Court in C. N. Arunachala Mudaliar's case emphasized the need to collect the donor's intention from the document's language and surrounding circumstances. The Tribunal found that the term 'putra poutra paramparya' was interpreted by the Calcutta High Court in Pandubala Debi v. Jotindranath Goswami AIR 1926 Cal. 993 to mean an estate of inheritance, including both male and female heirs. Additionally, the deeds conferred absolute rights to the assessee, suggesting individual ownership.The Tribunal also considered the assessee's prior admissions in tax returns, where he had consistently declared the properties as his individual property. Despite the assessee's argument that there can be no estoppel in tax matters, the Tribunal found that the consistent prior admissions were a significant surrounding circumstance.Conclusion:The Tribunal concluded that the properties were intended to be enjoyed by the assessee as his individual property, not as HUF property. The orders of the Commissioner were confirmed, and the appeals were dismissed.