AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
1974 (11) TMI 8
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....l Appeals Nos. 1090-1092 of 1970, is a brother of M. R. M. Ramaswami Chettiar, appellant in Civil Appeals Nos. 1093 and 1094 of 1970. The appeals preferred by M. P. Periakaruppan Chettiar arise out of a reference under section 66(1) of the Indian Income-tax Act, 1922, section 27(1) of the Wealth-tax Act, 1957, and section 26(1) of the Gift-tax Act, 1958, made at the instance of the Commissioner of Income-tax, Wealth-tax and Gift-tax, Madras, for determination of the following questions : " 1. Whether, on the facts and in the circumstances of the case, the status of the assessee was correctly determined as Hindu undivided family for the income-tax, wealth-tax and gift-tax assessments of 1959-60, 1957-58 and 1958-59, respectively ? 2. W....
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....properties in Ceylon to his first three sons. It is stated that the fourth son who was a minor at the time was given cash and properties in India equal to one-fourth of the value of his father's entire assets. For some time following the execution of the deeds of gift, Narayanan, Ramaswami and Periakaruppan carried on the business in Ceylon in partnership. Muthukaruppan Chettiar died in May, 1932. On December 20, 1950, a deed was executed by the four brothers partitioning the residue of their father's properties. Till the assessment year 1957-58, Periakaruppan filed returns in the status of an individual and was assessed as such. For the first time in the assessment year 1958-59, he claimed to be assessed in the status of a Hindu undivided ....
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....the assessee's claim in the income-tax, wealth-tax and gift-tax proceedings. The Tribunal upheld the Appellate Assistant Commissioner's decision and dismissed the appeals preferred by the department from his order. Ramaswami Chettiar also was being assessed in the status of an individual for many years even after the deeds of gift were executed. In the assessment year 1959-60, for the first time be claimed before the Income-tax Officer that he should be assessed in the status of a Hindu undivided family. The Income-tax Officer rejected the claim. In the wealth-tax assessment for 1959-60, a similar claim put forward by him was also rejected by the Wealth-tax Officer. On appeal the Appellate Assistant Commissioner held that the property be....
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....s, what they received by the gift would not be ancestral property in their hands in view of the fact that the Ceylon assets were the self-acquired property of the donor. If, however, the donor wanted to confer, as the High Court puts it, a " cumulative benefit " on the respective family units of the three sons, the property gifted would be the property of the Hindu undivided family in each case. The question, therefore, is one of construction of the two deeds and, as held by this court in C. N. Arunachala Mudaliar v. C. A. Muruganatha Mudaliar in such a case " the court would have to collect the intention of the donor from the language of the document taken along with the surrounding circumstances in accordance with the well-known canons of....
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.... be in favour of the donees and " their respective heirs, executors, administrators and assignees " which, according to him, indicated that really the objects of the bounty were the sons as heads of their respective families. We are unable to agree. It is clear from the deeds that the donor's desire was to transfer the properties to the three sons whom he named and described as donees. It was not stated that the donees would take the property as heads of their family units. The use of the words " heirs, executors, administrators and assignees ", in the context in which they appear, in our opinion, indicate on the contrary that the gift was to the sons absolutely, the property gifted being both heritable and alienable. There is nothing in th....