1982 (6) TMI 167

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.... (i) Ajantha, 32 Royapettah High Road, Madras-14, (ii) 19 and 20 Linghi Chetty St., Madras-1, (iii) 286 N.S.C. Bose Road, Madras-1. These brothers and sisters are children of late Haji A. Abdul Shukoor who had 11 children and these properties along with another property were purchased jointly in their names. One of the co-owners, late Mukthar Banu, died and her legal heirs were paid off and their interest taken over by payment of Rs. 1,42,000 (about) by the 10 co-owners of whom the present appellants are four. Hence, the four properties came to be co-owned by 10 persons. There arose (as stated in the preamble to the document) disputes and it was decided by the co-owners to sort out the inter se ownership between them in respect of the three....

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....sense of an ordinary gift or even as a deemed gift under the gift-tax law. Family arrangement merely sorted out the respective rights and that there was absolutely no basis for assuming that any one had either got or given up anything. From the point of view of appellants in this case, the collective enjoyment between ten persons in respect of the three properties was substituted by collective enjoyment of one property by four persons who are appellants in this case. It is difficult to ascertain one-tenth valuation in co-ownership properties by merely dividing the total value of the property by ten. In this view, he claimed that even the values placed on the properties by the authorities had no firm basis. He sought to buttress his case by ....

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....ed the records as well as the arguments. We are in agreement with the learned departmental representative that a gift for purposes of the Gift-tax Act could well be a deemed gift which may not always be a gift in the ordinary sense. When there is an exchange of property rights, it is possible that there may be an element of bounty, which may well qualify for the treatment as deemed gift under section 4(1) of the Act. However, in order to presume a deemed gift in a family (property) arrangement, we should imagine that the element of bounty as well as its extent should be spelt out clearly and distinctly. We are, however, not able to agree with the authorities that a clear case of such a bounty has been established in the case before us. In t....

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.... the parties because the mere bona fide belief that there was right took it out of liability to gift-tax. In coming to this conclusion, the High Court approved the reliance placed by the Tribunal on the decision of the Supreme Court in Sahu Madho Das's case wherein it was held that a family arrangement is based on the assumption that there is an antecedent title on the part of the parties and the arrangement merely acknowledges and defines what that title is. Relinquishment of his claim on interest in respect of some of the properties by one party in such a case, is not really relinquishment of his rights in the sense of giving up his rights so as to attract gift-tax liability. If such an element of bounty could not be inferred, where there....