TaxTMI 
TaxTMI 
1979 (9) TMI 18
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....id portion of the house were credited in a bank account standing in the joint names of the donee and the donor, the name of the donee appearing first. The Income-tax Appellate Tribunal has found as a fact that the donor withdrew moneys from this joint account by cheque and that moneys other than the rents realised from the said property were also credited to the said account. Although an allegation was made by the accountable person that all the said amounts withdrawn from the said account were utilised by the donee for her exclusive use, no evidence was led in that connection. The Tribunal held that as the donor resided in a portion of the said house he was not totally excluded from the property gifted. The Tribunal further held that not only was the donor not excluded from the possession of the gifted property but he was also not excluded from the enjoyment of the rental income from the gifted house, because the rents were credited to a joint account of the donee and the donor and there was no evidence that the donor's name was added therein merely for the sake of convenience and not with the intention of creating any right in him to the moneys credited in the joint account. Curi....
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....es of the case, the part of the gifted property which had been let out passed on the death of the deceased, and if so to what extent ?" Before considering the aforesaid questions, it will be useful to take note of the provisions of s. 10 of the said Act, it stood at the relevant time. Section 10, as it stood at the relevant time, read as follows: " Property taken under any gift, whenever made, shall be deemed to pass on the donor's death to the extent that bona fide possession and enjoyment of it was not immediately assumed by the donee and thenceforward retained to the entire exclusion of the donor or of any benefit to him by contract or otherwise :" The first proviso to this section is not material for the purposes of this case. The second proviso, which deals with the donor's continued residence in the gifted house, was inserted by the Finance Act of 1965 and hence cannot be taken into account for the purposes of this case. As far as the first question is concerned, it is common ground that the matter is concluded by the decision of the Supreme Court in CED v. Umesh Radra [1979] 117 ITR 579, a case where the relevant period was before the insertion of the second prov....
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.... first limb of the section may be infringed if the donor occupies or enjoys the property or its income, which even though he has no right to do so, he could legally enforce against the donee. The contention of Mr. Dastur, the learned counsel for the accountable person, is that the burden of proving that the donor was not excluded from the gifted property and that he retained a benefit therein or obtained benefit therefrom was on the department. It was submitted by him that, in the present case, the mere fact the rents of the aforesaid let out portion of the gifted property were deposited in the joint account in the names of the donee and the donor was not enough nor was the fact that the donor had withdrawn amounts from the said account. It was urged by him that in order to bring the case within section 10 of the said Act, it was the duty of the department to establish by evidence that the amounts withdrawn by the donor from the said account were utilised by the donor either for his personal consumption or for enjoyment. In order to appreciate the aforesaid contention of Mr. Dastur, it is necessary to refer to a few cases coming first to the decision of a Division Bench of th....
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.... property to the entire exclusion of the donor. The facts found show that the rents realised from the tenant were deposited in the joint account which stood in the names of the donee and the donor. It may be that this by itself would not show that the donee had not retained exclusive possession and enjoyment of the gifted property. What is significant, however, is that further facts found would show that the donor had withdrawn amounts from this joint account and no evidence has been led in support of the contention of the accountable person that the amounts withdrawn by the donor were utilised for the enjoyment or benefit of the donee. It is true, as suggested by Mr. Dastur, that there is no positive finding that the donee did not withdraw any amount from this joint account. What is important, however, is that the only positive finding is that it was the donor who withdrew moneys from this account and there was no evidence regarding the question as to how these amounts were utilised. In view of the aforesaid decisions, it is clear that the burden of establishing that the amounts withdrawn by the donor were utilised for the benefit of the donee or, in any event, not for the sole be....
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.... free will to keep the amounts in deposit in the deceased's bank account would not bring the case within the scope of the first limb of s. 10 of the said Act, that the mere existence of a bank account in the name of the deceased and the deposits therein made by the donee of the income from the settled properties does not show that the donee had not retained possession and enjoyment of the gifted properties to the entire exclusion of the deceased donor and that the donor to the extent of the amounts deposited in his account was either in the nature of a banker to the donee or had a fiduciary capacity with reference to the said amounts and there was no benefit which he had contracted so as to bring the case within the second limb of the second part of s. 10 of the said Act. On the basis of these conclusions, it was held that the value of the properties gifted could not be included in the principal value of the estate of the deceased. Reference was also made by Mr. Dastur to another decision of the Madras High Court in M. Ranganatha Sastri v. CED [1966] 60 ITR 783 (Mad), where it was observed that even in the matter of dealing with each other's property, a Hindu wife is placed in a pe....
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....oyment by the donor of the property or its income and hence s, 10 of the said Act was not applicable. It was submitted by Mr. Joshi that these decisions of the Madras High Court were not correctly decided particularly in view of the decision of the Supreme Court in George Da Costa v. CED [1967] 63 ITR 497 (SC) and the other cases which we have already referred to earlier. In our view, it is not necessary to go into the question is to whether these cases have been correctly decided or not, because all the aforesaid cases cited by Mr. Dastur are clearly distinguishable on facts. It must be observed, in the first place, that in view of the decision of the Supreme Court in CED v. Umesh Rudra [1979] 117 ITR 579, the mere fact that the husband continues to reside with the wife in a house or residential property gifted by the husband to the wife would not attract the provisions of s. 10 of the said Act. As far as the aforesaid decisions cited by Mr. Dastur are concerned, it is significant that in none of these cases was there evidence to show that the donor had withdrawn moneys from the joint account in which the income of the property gifted had been deposited without there being any evi....