TaxTMI 
TaxTMI 
1982 (5) TMI 99
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....and Hari Shankarlal through court on16-10-1955. The arbitrators filed their award into the court. No objections were filed by the parties to the suit against the said award. Hence, the said award was made into a rule of the court on21-11-1955. 3. The following sentences in the award may be useful and so they are extracted as under: "It was represented before us by Shri Amar Nath, Shri Jai Nath and Shri Prem Nath that before the death of their father, Bhagirath Mal, the respective parties in the suit had their personal properties which had all along been treated as such by the income-tax authorities." "Each party shall hold himself or herself one-fourth of the said property and shall hold the same as 'tenant-in-common' as they have been holding since first day of May, one thousand nine hundred and fifty-three." "The parties shall possess and enjoy the one-fourth share of the properties in severalty, to the exclusion of each other without any let or hindrance from one another." "Provided always that the proprietary rights of Smt. Kishan Devi, plaintiff, shall be a 'life interest' only ceasing on her demise, when the inheritance of the same shall open and shall be in ac....
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....d as 7th defendant in the suit. The following averment was made at para 3 of the amended plaint: "That Lala Bhagirath Mal died on29-4-1953. After the death of Lala Bhagirath Mal the three sons of Lala Bhagirath Mal and defendant No. 7 partitioned the joint Hindu family properties and disrupted the joint Hindu family. They become owners of the properties detailed in Schedule 'A' in equal shares, i.e., one-fourth share each. The plaintiff No. 1 represented his family consisting of himself and his sons, plaintiff Nos. 2 to 5, defendant No. 1 represented himself and his sons, defendant Nos. 2 and defendant No. 3 represented himself and his 3 sons, defendant Nos. 4 to 6." The said suit ended in a compromise. The compromise petition by all the parties to the suit was filed on15-1-1970into the Court. Defendants 5 and 6 were minors. Permission was taken by Shri Prem Nath to enter into compromise on behalf of his minor sons. The permission was duly granted by the High Court. A copy of the compromise petition was provided at pages 18 to 24 of the paper book filed before us. The judgment of the Delhi High Court in pursuance of the compromise is provided at pages 16 and 17 of the paper b....
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.... which is the appeal preferred by this very assessee relating to the assessment year 1970-71 were cited. The cited portion of the order is as follows: "Before I part with this case I wish to make it clear that the ITO's view that the action of the assessee of throwing her self-acquired property into the common hotchpot amounted to a gift within the Gift-tax Act, is patently incorrect in view of the decision of the Delhi High Court in CGT v. Munshi Lal [1972] 85 ITR 129. I have to make this observation because sufficient time had been spent to show that the ITO's view, was incorrect in stating that there was a gift. In fact at one stage it was pointed out that the ITO was not consistent in his conclusion because when be said there was a gift, he could not assess the income from that gifted property in her hands and on account of this contradiction his order should not be approved." The arguments advanced on behalf of the assessee were not accepted by the Commissioner (Appeals). The learned Commissioner held that the earlier decision of the Delhi High Court in CIT v. Pushpa Devi [1971] 82 ITR 7 was not overruled in Munshi Lal's case. Further he observed that the decision of the....
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....d in law the learned CGT (Appeals) erred in upholding the order of the GTO to the effect that the passing of the properties valued at Rs. 2,84,188 under declaration dated 5-9-1969 to the sons of the appellant, constituted a gift taxable under the Gift-tax Act." We feel that the second ground is formulated on a wrong presumption of facts. The learned Commissioner nowhere in his impugned order held that the declaration of Smt. Kishan Devi dated5-9-1969amounted to a gift. As already stated above, the learned Commissioner held that the declaration of Kishan Devi dated5-9-1969has no legal consequences. If by the above ground the assessee seeks to argue that the declaration dated5-9-1969is operative and the properties worth Rs. 2,84,188 passed on to the sons only through that document, then we cannot approve that argument and it is liable to be rejected at our hands. Firstly, in IT Appeal No. 3395 of 1975-76 which represents the assessee's own case for the assessment year 1970-71, it was held, at the close of para 5 of the order, that the declaration made by Kishan Devi in this case does not amount to blending the self-acquired property of Smt. Kishan Devi with that of the joint famil....
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....mstances of the case and in law the learned CGT (Appeals) erred in holding that there was actually no joint family as such in existence in which the assessee could throw her property." It is the contention of the assessee that there is ample evidence on record to prove the existence of a joint family between Kishan Devi and her 3 sons. After carefully perusing the whole record, we are unable to accept this contention. We have already extracted in the previous paras of our order the representation made by S/Shri Amar Nath, Jai Nath and Prem Nath before the arbitrators, who filed their award into court, on 16-10-1955. Copy of the award is provided in pages 2 to 4 of the paper compilation before us. It was never the case of the 3 sons that they constituted a Hindu joint family with their late father. If really they constituted a Hindu joint family with their late father and the suit properties which were the subject-matter of Suit No. 136 of 1955 on the file of Sub-Judge, 1st class, Delhi, were joint family properties, in which Bhagirath Mal was holding only one-fourth share, then there was no reason why the 3 sons as well as the widow were given one-fourth share each in those prop....
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....ate the argument by the assessee's counsels that the lower authorities went wrong in holding that there was no joint family existing between Kishan Devi and her 3 sons. When there is no joint family, there is no question of throwing the separate properties of Kishan Devi into the common hotchpot. Thus we repel the contentions found in Ground No. 3 of the grounds of appeal. 12. In Ground No. 4 it is contended that, inasmuch as the act of throwing the property in the common hotchpot was an unilateral act of Kishan Devi, it would not result in a gift, liable to tax. This argument is not quite clear. The assessee did not make it clear as to whether the act of throwing the property of Smt. Kishan Devi into the common hotchpot was done by her declaration dated5-9-1969or by the compromise decree dated15-1-1970. If what the assessee means is confined to the declaration dated5-9-1969, her contention is quite acceptable, and it was nobody's case that the declaration dated5-9-1969is operative. However, if the assessee wants to advance an argument that even under the compromise also, it was only Kishan Devi who had blended her property or who had relinquished all her rights to the property ....
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....t to the notice of Shri O.P. Vaish the provisions of section 14 of the Hindu Succession Act, he wanted to argue that inasmuch as the rights of Kishan Devi in the property flowed from the decree dated 21-11-1955, the case should be considered as one governed under sub-section (2) of section 14 of the Hindu Succession Act, but not under sub-section (1) of section 14. Section 14 of that Act is as follows: "Property of a female Hindu to be her absolute property.---(1) Any property possessed by a female Hindu, whether acquired before or after the commencement of this Act, shall be held by her as full owner thereof and not as a limited owner. Explanation: In this sub-section, 'property' includes both movable and immovable property acquired by a female Hindu by inheritance or devise, or at a partition, or in lieu of maintenance or arrears of maintenance, or by gift from any person, whether a relative or not, before, at or after her marriage, or by her own skill or exertion, or by purchase or by prescription, or in any other manner whatsoever, and also any such property held by her as stridhana immediately before the commencement of this Act. (2) Nothing contained in sub-section (....
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....ion it is the provisions of sub-section (1) and not sub-section (2) of section 14 which comes into operation after the advent of the Hindu Succession Act, 1956. Under the provisions of section 14(1), the limited rights which Smt. Kishan Devi was enjoying in the properties, on the advent of the Hindu Succession Act, was enlarged into absolute rights. Thereby, even though Kishan Devi was allotted only a life estate under the decree dated21-11-1955, by virtue of section 14(1) of the Hindu Succession Act, her rights were enlarged into absolute rights. In this posture of her rights, we are unable to appreciate the contention of Shri O.P. Vaish that the extent of interest of Kishan Devi held in the property, must be determined with reference to section 14(2) of the Hindu Succession Act. 15. Lastly, it is contended that in any view of the matter, it is not a case where gift-tax is leviable. Shri O.P. Vaish elaborated his argument saying that according to the revenue, the decree in Suit No. 376 of 1969 on the file of the Delhi High Court is the document through which Kishan Devi deemed to have transferred her interest in the properties to her sons. However, the document of transfer shou....
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..... Therefore, this is a self-contained document from which the rights of the donee flow unlike in the Madras High Court case where only a memo was filed admitting the plaintiff's claim in the suit. Further in the Madras High Court case the suit is for declaration of title and for permanent injunction. However, in this case the suit itself was filed for partition and separate possession and for rendition of accounts. Now let us see whether a final decree for partition is required to be registered under the Indian Registration Act. As already stated, the judgment of the Delhi High Court regarding the compromise was provided at pages 16 and 17 of the paper book. The last sentence of the judgment is as follows: "The parties should put in the requisite stamp paper for the preparation of the final decree within three weeks." Therefore, it is evident that the requisite stamp was directed to be filed before final decree is embossed thereon. It is not the case of the assessee that such stamp paper was not supplied or a final decree was not prepared on a duly stamped paper and as such it is an inchoate decree under which no rights flow. In the absence of any such argument we take it tha....