Donor's intention controls character of gifted property, and sons' credit entries were treated as taxable gifts.

Where gift deeds do not clearly create a family asset, the donor's intention must be gathered from the instrument and surrounding circumstances to decide whether the transfer was to the sons personally or for the Hindu undivided family. On the facts stated, the recitals showed an absolute gift to the sons eo nomine and the later partition references did not alter the character of the original transfer, so the properties were treated as the assessee's self-acquired property. Once that character was established, the subsequent credit entries in favour of the sons were regarded as a voluntary disposition of the assessee's own property and therefore constituted a taxable gift under the Gift-tax Act.

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Issues: (i) Whether the properties received under the 1932 gift deeds were held by the assessee as Hindu undivided family property or as his individual property for income-tax and wealth-tax purposes. (ii) Whether the transfer of Rs. 1,60,000 to the assessee's sons was a taxable gift under the Gift-tax Act.

Issue (i): Whether the properties received under the 1932 gift deeds were held by the assessee as Hindu undivided family property or as his individual property for income-tax and wealth-tax purposes.

Analysis: Where the document does not clearly specify the character of the interest created, the true intention of the donor has to be gathered from the language of the instrument and the surrounding circumstances. The decisive question is whether the donor intended to confer an absolute bounty on the donee personally or to effect a family arrangement or partition benefiting the branch as a unit. The recitals in the gift deeds treated the properties as the donor's own and indicated a gift to the sons eo nomine. The subsequent partition recitals and family arrangements did not establish that the original transfer was ancestral or that it was meant for the family as such.

Conclusion: The properties were held by the assessee as his self-acquired property and not as Hindu undivided family property. The finding was against the assessee.

Issue (ii): Whether the transfer of Rs. 1,60,000 to the assessee's sons was a taxable gift under the Gift-tax Act.

Analysis: Once the properties were held to be the assessee's individual property, the credit entries transferring Rs. 80,000 each to the sons were not referable to any partial partition of joint family property. The transfer was a voluntary disposition of the assessee's own property and answered the character of a gift for purposes of the Gift-tax Act.

Conclusion: The amount of Rs. 1,60,000 was liable to assessment as a gift. The finding was against the assessee.

Final Conclusion: The references were answered in favour of the Revenue, the claim to Hindu undivided family status failed, and the consequent gift-tax liability was sustained.

Ratio Decidendi: In the absence of clear words or convincing surrounding circumstances showing a family bounty or partition, a transfer by a Hindu father is construed according to the donor's intention, and property gifted to sons eo nomine is treated as the donee's absolute, self-acquired property rather than Hindu undivided family property.

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