TaxTMI 
TaxTMI 
1987 (12) TMI 84
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....inarayana Reddy and Sri Dayakar Reddy on 25th May, 1970 the terms of which would be relevant and would be subsequently referred to in this order. In pursuance of the illatom adoption, runs the case of the assessee that Smt. Ramasubbamma was given in marriage to Sri Dayakar Reddy on 2nd November, 1973. Smt. Suharlata the second daughter of Sri M. Adinarayana Reddy was given in marriage to Sri Y. Adisesha Reddy on 13th Dec., 1973. It is the case of the assessee that at the time of her marriage with Sri Y. Adisesha Reddy, her father Sri Adinarayana Reddy promised to give her 3 Acs. of wet land and 8-1/2 Acs. of dry land towards 'pasupukunkuma'. 3. In 1974 one Smt. Y Sarojanamma of Sirsanambedu village near Naidupet, Nellore District, filed a suit against Sri M. Adinarayana Reddy claiming half the share in his properties on the ground that she had lived with him from 1970 to 1973 and during that period she rendered all sorts of services to him, in consideration whereof, he promised to give her half share in his property. Sri M. Adinaryayana Reddy, donor-assessee, actually died on 12th Sep., 1976. Prior to his death he settled his properties to his wife, two daughters and two sons-in....
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....efore the GTO that the illatom son-in-law is entitled to half share in the property held by his father-in-law (adopter). The original of the adoption deed dt. 25th May, 1970 was not filed before the GTO on the ground that the same was filed with the Land Tribunal in connection with the land ceiling proceedings pending at that time. The GTO first pouncing upon the fact of the illatom adoption agreement held that the document was executed on a plain paper and was not registered and it was executed three years prior to the marriage. The GTO also held that on verification of the concerned provisions of Hindu Law and the commentaries thereon, it is found that the illatom agreement does not give any actionable right to the illatom son-in-law. In support of this finding a passage in N.R. Raghavacharis Hindu Law Commentary was relied upon which is as follows: "By the illatom affiliation, the adopter does not deprive himself of his absolute power of disposing of his property in any way he likes, and hence the illatom son is not entitled to interdict the adopter's alienation on the ground that it is unauthorised." The GTO held that the legal position having been expounded in the above ....
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....f s. 5(1)(vii) of the GT Act as according to the GTO they were not made on the occasion of the marriage. Thus rejecting the contentions advanced on behalf of the assessee he completed the assessment, computing the taxable gifts as follows: Gifts to sons-in-law Rs. 24,572 x 2 = Rs. 49,144 Gifts to 2 married daughters 24,572 x 2 = Rs. 49,144 Gifts to wife to Rs. 21,140 was exempt . under s. 5(1)(viii) . Rs. 98,288 Less : Basic Exemption Rs. 5,000 TAXABLE GIFT Rs. 93,288 or Rs. 93,290 Thus the GTO computed the value of the total taxable gift at Rs. 93,290 by his assessment order dt. 30th March, 1981. 4. Aggrieved against the assessment order the assessee went in appeal before the AAC. He held by his impugned order that under Hindu Law Sri V. Dayakar Reddy was entitled to half share of the property of Shri M. Adinarayana Reddy even during his life time. He relied upon the Mayne's Hindu Law and Usage, 11th Edition Page 280 Paragraph 228. He also relied upon the AP High Court's decision in the case of Peechu Ramaiah vs. Government of Andhra Pradesh (1976) 2 APLJ 27....
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....casion of her marriage the same falls outside the scope of gift within the meaning of s. 2(xxii) of the GT Act. Thus he ordered exclusion of the following gifts and their values from the total value of the taxable gift computed by the GTO. 1. Sri Y. Dayakar Reddy Rs. 24,572 2. Sri Y. Ramasubbamma Rs. 24,572 3. Smt. Y. Suharlata Rs. 24,572 Thus the AAC allowed the appeal filed before him. 6. Aggrieved against the impugned order passed by the AAC the Department came up in second appeal before this Tribunal and thus the matter stands for our consideration. In the grounds of appeal the Revenue took up the position that the AAC erred in holding that there is no element of gift in a settlement made in favour of Shri Y. Dayakar Reddy, illatom son-in-law and Smt. Ramasubbamma, daughter. So also, the AAC erred in holding that there is no element of gift in the case of Smt. Suharlata and ultimately it was contended that ordering exclusion of Rs. 73,716 from out of the total taxable gift of Rs. 93,290 determined by the GTO is erroneous and should be set aside. 7. We have heard Shri D.S. Prasad Reddy, learned counsel for the assessee and Shri K.K. Viswana....
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.... Reddy and he has been continuing as one of the members of the donor family. It is stated further that apart from love and affection which he got towards his first son-in-law the fact that the first son-in-law has been looking after the properties of the donor with due care and caution was stated to be an additional factor which 'prompted the donor to execute the gift deed. Now we are at the point whether the gift deed in his favour is valid or not. According to us for two reasons it was valid. Firstly because in the Land Revenue Appellate Tribunal proceedings when the matter went up to the High Court, the Hon'ble High Court in CRP Nos. 630 and 631 of 1982 by their judgment dt. 11th Feb., 1987 held that illatom adoption agreement was held to be established and that as per the terms of the agreement Sri Y. Dayakar Reddy was entitled to half the property of his father-in-law and therefore, the Hon'ble High Court directed that half the property as per the agreement dt. 25th May, 1970 should be included in the holding of Shri Y. Dayakar Reddy. In the said order of the AP High Court the lower Tribunals following the case of Sri C. Narayanappa and Ors. vs. State of AP (1978) APLJ 60 held....
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....umed to have taken into consideration the march of law till the date of their judgment. Therefore, we are presuming that the later division bench decision of the AP High Court must have considered the Supreme Court's decision in AIR 1974 SC 2161. In fact, though we studied fully (1980) 2 APLJ 333 we did not come across any reference being made to AIR 1974 SC 2161. It is not case of the Revenue that the matter (the judgment dt. 11th Feb., 1987 in CRP Nos. 630 and 631 of 1982) was taken in further appeal either to the full bench or to the Supreme Court. Therefore, it must be taken to have become final and accordingly we have to hold that the illatom agreement dt. 25th May, 1970 was true and established and according to it half the property held by the donor must belong to the illatom son-in-law, Sri Y. Dayakar Reddy. It was never the case of the assessee that there was any partition between the father-in-law and the first son-in-law during the former's life time. Therefore, afortiori it shows that half the property is covered by the gift deed in favour of Sri Y. Dakayar, were the own properties of Sri Y. Dayakar Reddy. The other undivided half only belongs to the donor Sri M. Adinara....
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.... behalf of her husband and the gift deeds in favour of Shri Dayakar Reddy as well as his wife should be considered as having been executed by the donor for adequate consideration of Shri Dayakar Reddy giving up his joint rights in all the properties held by his father-in-law Sri Adinarayana Reddy and on that ground it should not be held to be a gift at all. We find this argument difficult to accept. This was never the case put forward before any of the lower authorities. This argument is not a pure legal argument. The question of benami is always a mixed question of fact and law and for the first time ordinarily we would be aversed to allow any question of fact being looked into at our stage. Therefore, we refuse to entertain this argument for the first time before us. 9. Now let us consider the validity of the gift deeds dt. 26th Sep., 1973 in favour of Smt. Ramasubbamma and Smt. Suharlata. As far as these gift deeds are concerned it was vehemently contended by the learned departmental Representative that their marriages took place in 1973 whereas, the gifts were made in 1976 three long years after their marriages. The gifts were purported to have been made in pursuance of the ....