TaxTMI 
TaxTMI 
2003 (11) TMI 276
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....and Bhadresh K. Shah. The Assessing Officer found that on these facts section 4(2) of the GT Act which deals with gift to include certain types of transfer is attracted, holding that the assessee is liable to gift-tax in respect of conversion of individual property into HUF property. The Arbitration Award was given on 30-3-1995. The Assessing Officer adopted the market value of each plot at Rs. 1,80,99,105 as on 30-3-1995 and computed the total gift of Rs. 3,61,98,210. In the wealth-tax assessments also for assessment years 1991-92 to 1994-95 the Assessing Officer included the value of two vacant sub-plots as "urban land" within the meaning of WT Act. In wealth-tax assessments, the Assessing Officer valued the bungalow on sub-plot No. 417/1/1 as per Schedule III of the WT Act and rejected the plea of the assessee that sub-plot Nos. 417/1/2 and 417/1/4 be treated as "land appurtenant" to the bungalow constructed on sub-plot No. 417/ 1/1. 3. Aggrieved by the order of the Assessing Officer, the assessee filed the wealth-tax appeals in respect of assessment years 1991-92 to 1994-95 as well as the gift-tax appeal against the gift-tax assessment for assessment year 1995-96. The learne....
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....ispute among family members regarding the ownership of certain properties including Mohan Nivas and its surrounding land. One of the members of HUF of Dr. K.M. Shah took the objection that the property known as Mohan Nivas and surrounding lands belongs to HUF of Dr. Kantilal M. Shah and not only his individual property and objected to sign the papers etc. The matter was carried to Court by one of the member of HUF Dr. K.M. Shah namely Bhadresh K. Shah son of Dr. K.M. Shah. The Hon'ble Judge of City Civil Court had admitted the suit bearing civil suit No. 5332 of 1994 and after hearing the parties the Hon'ble Court had appointed an arbitrator Mr. S.N. Soparkar by an order dated 25-10-1994 to collect the necessary evidence and documents etc. and to arrive at the legal ownership of properties belongs to Individual or HUF or Dr. K.M. Shah. Mr. Soparkar thereafter proceeded on the matter and held the conferences on various dates with plaintiff and defendants. He had collected all necessary documents and evidences regarding the disputed properties right from the very beginning of the plot purchased. After scrutinising all such original documents and evidences Mr. Soparkar hold in issu....
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....ot given basis or any finding of his holding that the property belongs to the HUF of Dr. K.M. Shah. In view of the above, a further letter dated 20-3-1998 issued to the assessee to furnish the following details : (a) Date of acquisition of property known as Mohan Nivas and its adjacent land. (b) Source of acquisition of property. Please clarify it was inherited or acquired by you. (c) Copies of documents submitted by you before arbitrator Shri S.N. Soparkar in arbitration proceedings. (d) Reason for your agreement to the proposition that property belongs to HUF. (e) Reason for your agreement to the proposal of arbitrator to pronounce his award without giving reason in support of award. The assessee vide his letter dated 24-3-1998 submitted that so far as knowledge the property Mohan Nivas and adjoining land was purchased on 6-1-1954 and to the best of his knowledge and belief, it was acquired out of fund available from the ancestor property. However, he further stated that he is trying to collect the details and shall submit the same as soon as he will gather it. As regards the query No. B2E the assessee submitted that Shri Soparkar is expert in legal matter and t....
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....imited purpose of the Direct Tax Laws, then it can be said that Dr. K.M. Shah sold his individual property and gave 2/3rd of the sale proceeds to his sons and as such made a gift of the said amount to his sons. The CGT(A) held that under both the circumstances, gift-tax is exigible in respect of 2/3rd of the property. 8. Aggrieved by the order of the CGT(A), the assessee is in appeal before us and has raised the following grounds : (1) That the learned CGT(A) ought to have held that the property in question belonging to "HUF" of Dr. K.M. Shah and not to him as "Individual". (2) Alleged gift not falling within period of assessment year 1995-96, entire order is illegal and bad in law. (3) The award ought to have been accepted and could not have been termed as collusive and unenforceable on any count, especially when learned Assessing Officer has adopted date of "award" as date of "Gift". (4) That impressing individual property as of HUF property could only be in the year 1954 and/or 1968 when the Bungalow was constructed and the relevant amendment in section 4(2) of the Act having been brought on statute book only from 1-4-1972, no gift-tax could have been levied on....
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....question was executed in their favour. 9.2 The learned counsel concluded that the Gift-tax assessments framed by the Assessing Officer be quashed. As it is a case of family arrangement, there is no gift within the meaning of section 2(xii) of the GT Act. Alternatively, the learned counsel submitted that the valuation should be done under section 7 read with Schedule III of the WT Act, according to which the valuation of whole property could be only Rs. 22,593. 10. On the other hand, the learned DR, supported the orders of the authorities below. He submitted that from records, it can be seen that the Arbitrator has not given any basis or any finding for holding that the property belonging to HUF of Dr. K.M. Shah. The Assessing Officer issued a letter dated 20-3-1998 wherein he asked the assessee to furnish various details and same were not furnished. The assessee has also filed statement of wealth as well as assessment orders for assessment years 1988-89 to 1994-95 (pages 1 to 27 of the paper book) from which it can be seen that the property in question was declared by the assessee as individual property. The assessee has also shown liability to Dr. K.M. Shah (bigger HUF) in t....
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....eason the assessee was declaring this property as separate property in the wealth-tax returns as well as in the income-tax returns. In assessment years 1991 -92 to 1994-95 also in wealth-tax returns filed the assessee has declared "Mohan Nivas" which was constructed on sub-plot No. 417/1/1. The Assessing Officer in the wealth-tax assessment valued this house as per Schedule III. The Assessing Officer has held that remaining two plots i.e., sub-plot Nos. 417/1/2 and 417/1/4 fall under the category of "Urban Land". The assessee vide letter dated 13-3-1996 which is appearing at page 30 of paper book filed by the assessee pointed out that the assessee has not shown in the return of wealth two vacant sub-plots i.e., sub-plot Nos. 417/1/2 and 417/1/4. These two vacant plots are required to be valued as per Rule 8 of Schedule III of the WT Act. The property in question did not belong to the HUF as held by this Tribunal in WTA Nos. 55 to 58/Ahd./99 for assessment years 1991-92 to 1994-95 vide order dated 9-1-2001. The learned DR also relied on the order of this Tribunal dated 25-5-2001 on Miscellaneous Application of the assessee being MA No. 13/Ahd./01 wherein it has been stated that the ....
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....ot No. 417/1/3 gifted to two daughters and gift deed is executed by two sons. The buyer was insisting that sale deed should be executed by two sons in whose names the property is standing in the revenue records. There was a dispute and assessee agreed for arbitration proceedings with a view to avoid any escalation in dispute which already existed. The counsel of the assessee also relied on the definition of "donee", "donor" and "gift" as contained in section 2 of the GT Act and contended that on consideration of various definitions of the Act, it is clear that the gift for the purpose of Act means transfer of any property made voluntarily and, without consideration by one person to another. Here the dispute was already in existence and in future there was every possibility of escalation of the said dispute. For this reason the assessee agreed for arbitration and Arbitration Award is binding. The assessee agreed for arbitration stances and with a view to obtain whatever money he can get at this old age. Since the assessee agreed for arbitration proceedings for a consideration i.e., both sons of the assessee will agree to sign the sale deed of property. Therefore there is no gift mad....
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....the property in question belonged to HUF of Dr. K.M. Shah. This was separate property of Assessee. 13. In the grounds of appeal, the assessee has also took a ground that the assessee impressed the property in question as of HUF property in the year 1954 and/or 1968 when the building was constructed and the relevant amendment to section 4(2) of the Act were brought on statute book from 1-4-1972. This plea of the assessee also could not be accepted because conduct of the assessee in subsequent years i.e., assessment years 1973-74 onwards reveals that the assessee was disclosing this property as belonging to individual. Regarding the ULC proceedings also we found that in ULC proceedings, Hon'ble High Court in decision delivered on 27-1-1995 in Spl. Civil Application No 3949 of 1998 has stated that father of two petitioners purchased the land in the names of his two sons. This clearly indicates that real owner was assessee. Moreover in ULC proceedings the concerned authorities did not examine the income-tax and wealth-tax records of the assessee. 14. In the impugned order the learned CIT(A) recorded the following reasons for holding that the property in question belonged to Dr. K....
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....ch was passed in July, 1995. Only in a collusive agreement, the parties to the dispute could have entered into an agreement for disposal of the property without waiting for the final outcome of the Civil Court. (viii) The outcome of the award was pre-determined. Otherwise, the parties to the dispute could not have entered into an agreement of sales within 2 days of the award. (ix) There was no HUF of Dr. K.M. Shah in existence prior to the award and there were no assets, properties or sources of income belonging to such an HUF. The point as to from where or which source the HUF could have acquired the movable assets viz, shares and debentures of various companies, which have been declared to be belonging to the HUF seems to have been totally overlooked by the Arbitrator. (x) The Arbitrator has exceeded his authority inasmuch as he has relocated even sub-plot No. 417/1/3 belonging to the 3 daughters of Dr. K.M. Shah, when the property in dispute comprised of only sub-plot No. 417/1/1, 417/1/2 and 417/1/4. How such an award would become acceptable to the 3 co-owners of sub-plot No. 417/1/3 is not known. Such a thing is possible only in a collusive deal when all the effected ....
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.... property belonging to his family through the act by which he impressed his separate property with character of property belonging to his HUF. In such a situation the assessee (individual) shall be deemed to be made a gift of so much of property as the member of HUF other than himself, would entitle to it, if a partition or converting property has taken place immediately after such conversion. The valuation of property converted has to be done as per Schedule II as provided in section 6(1) of GT Act which in turn adopted Schedule III of the WT Act, 1957. In the case of Bharat Hari Singhania v. CWT [1994] 207 ITR 1 the Apex Court held that rule regarding valuation are mandatory. In the gift tax assessment order the Assessing Officer valued two plots at market value ignoring the DVO Report as 31-3-1994, who valued these two vacant plots at Rs. 2,21,22,000. No other expert Report on the date of Gift is available. The assessee has converted Mohan Niwas a residential house as well as two vacant plots the value of which as adopted by the WTO as on 31-3-1994 relevant to assessment year 1994-95 in the wealth tax assessment year is Rs. 2,24,55,420. Out of this the assessee is entitled to 1/....
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....N. Chopra, A.M. -I have carefully gone through the proposed order of the Ld. Judicial Member and find myself unable to concur with the finding of the Ld. Judicial Member that the assessee has converted his individual property into HUF property liable to be assessed as deemed gift as per the provisions of section 4(2) of the Gift-tax Act, 1958 for assessment year 1995-96. Despite my best efforts, I am unable to persuade myself to accept the view that any transaction for transfer of individual property has been made by the assessee during the asstt. year 1995-96 within the mischief of section 4(2) of the Gift-tax Act. 2. It would be useful to set out at the outset factual matrix of the case bereft of details which are not relevant for the controversy before us. 2.1 On 6-1-1954 the two minor sons of the assessee, namely, Shri Bhadresh Kantilal Shah and Mrugesh Kantilal Shah purchased land through their father being final plot No. 417/1 of T.P. Scheme No. 3 in Mouje Changizpur, Taluka City, District Ahmedabad. The total area of the plot is 2970 sq. mt. The plot was purchased for an amount of Rs. 34,605 as per the sale deed placed at pages 48 to 56 of the paper book filed by the l....
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.... appointed Shri S.N. Soparkar as sole arbitrator on 29-10-1994 to resolve the dispute between the assessee and the two sons. 2.10 On 27-1-1995 the Gujarat High Court set aside the orders dated 10-12-1982 and 30-7-1987 directing the competent authority under the Urban Land Ceiling Act to decide the entire issue concerning excess land afresh. 2.11 On 30-3-1995 Shri S.N. Soparkar, the sole arbitrator made his award holding that the disputed properties including final plot No. 417/1 are HUF property from the date of its acquisition and partitioned the property by metes and bounds. 2.12 On 1-4-1995 the assessee and his two sons and three daughters entered into an agreement for sale of the property, namely, Mohan Niwas in final plot No. 417/1. 2.13 On 18-7-1995 the said Civil Court passed the consent decree in terms of the arbitration award placed at page 213 of the paper book. 2.14 On 20-4-1996 the assessee along with his two sons and daughters executed sale deed for sale of the property at final plot No. 417/1 with the promoters of Sugam Shops and Housing Co-operative Society Ltd. etc. 3. At this stage, it is relevant to mention that the assessee has been filing his r....
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....pheld the findings of the Assessing Officer and sustained the assessment. In support of his conclusions that the arbitration award was collusive, the CGT(A) observed, inter alia, at page 9 of the appellate order as under:- "(vi) The award appears to be more in the nature of family settlement, which in any case could have been arrived at between Dr. K.M. Shah and his two sons without resorting to the procedure of a civil suit having been filed in the court." 6. Aggrieved, the assessee has come up in appeal before the Tribunal. 7. Shri K.C. Patel, ld. counsel for the assessee essentially made two fold contentions. Firstly, he argued that no transaction or event has taken place during the period relevant for assessment year 1995-96 which may form the basis for assessing the deemed gift by invoking the provisions of section 4(2) of Gift-tax Act. Ld. counsel argued that the action of the tax authorities in making the arbitration award as the basis for invoking the provisions of section 4(2) of the Gift-Tax Act in the assessment year under reference is factually and legally unsustainable. According to Shri Patel, merely because arbitration award has been given by Shri Soparkar o....
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....ings under the Urban Land Ceiling Act placed at pages 101 to 183 whereunder the property in question has been shown as family property by the two sons of the assessee. In this connection, ld. counsel specifically referred to judgment of Gujarat High Court dated 27-1-1995 in Special Civil Application No. 3949/98 placed at pages 151 to 155; (v) Documents relating to civil suit filed in Civil Court placed at pages 184 to 239; and (vi) Agreement to sell dated 1-4-1995 by all the parties including the assessee and his two sons placed at pages 355 to 368. On the basis of the aforesaid documents and evidence, ld. counsel strongly urged that the finding reached by the revenue authorities that the arbitration award as well as the civil suit are collusive and non-genuine is based on conjectures and surmises. According to the Ld. counsel, except declaring the Mohan Niwas property in his tax returns as individual property, there is nothing on record to say that the assessee had undisputed title of ownership over the property. He further contended that the property has been purchased by the two minor sons and stand in their names. Even before the Urban Land Ceiling authorities, two son....
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....the Gift-tax Act. If so, whether such a conversion by the assessee has taken place during the period relevant for assessment year 1995-96 which is the year under question. 12. Insofar as the first question is concerned, the revenue authorities have proceeded on the footing - and the Ld. Judicial Member has concurred with the same - that the property in question belong to the assessee as his individual property and the arbitration award as well as the consent decree are merely collusive events. Obviously the conclusion regarding the collusive nature of the award or the civil suit is based on the assumption that the assessee had uncontested, undisputed and unassailable right of ownership over the property. I find myself unable to subscribe to this view. Facts are undisputed that the property in question has been purchased by the sons of the assessee, Bhadresh and Mrugesh, and it stands registered in their names as legal owners of the properties. This property has been purchased by the two sons for a sum of Rs. 37,605 on 6-1-1954. At that time, the two sons were minors and, therefore, the assessee as the father and natural guardian executed the sale deed on behalf of the purchasers....
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....f the property. The property is registered in the name of his sons and mere inclusion of such property in wealth tax returns would not alter the legal position regarding the ownership of the property. Filing of returns by the assessee is a unilateral act of the assessee and merely because the assessee chooses to include any property as his property would not confer title of ownership over the property on the assessee. It is significant to note that the two sons of the assessee, Bhadresh and Mrugesh, have at no point of time abrogated their title, interest or claims in the property. On the contrary, the two sons have all along by their conduct and actions have indicated that they were the owners of the property. As already indicated hereinbefore, when a subplot No. 417/1/3 was to be gifted to the three sisters in July, 1968, the gift deed was executed by the two sons as donors which clearly indicate that they were the accepted and acknowledged owners of the property in the family of the assessee. In my opinion, the facts and evidence brought on record clearly bring out that the two sons of the assessee held valid title of ownership over the property and in case of dispute and litiga....
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....sessee found it worth while to settle the dispute between him and his sons by agreeing to the family arrangement, the said arrangement could not be ignored by a tax authority. Now, coming to the provisions of section 4(2) of the Gift-tax Act, this sub-section has been inserted by the Finance (No. 2) Act, 1971, with effect from 1-4-1972 with a view to closing loophole for avoidance of gift tax liability by using the device of converting self-acquired property into Hindu Undivided Family property. Under the amendment to section 4, it has been provided that when a member of a Hindu Undivided Family converts his separate property into joint family property, he shall be deemed to have made a gift in favour of the family. The definition of the term "gift" in section 2 (xii) has also been modified so as to cover the transfer or conversion of any property referred to in section 4 deemed to be a gift under that section. However, the provisions of section 4(2) would not be applicable in the case of family settlement, as held by the Madras High Court above, since no transfer of property was involved within the meaning of section 2 (xiv) under the family arrangement or family settlement. There....
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....urt refuses to set aside the award it shall by a separate order pronounce judgment according to the award and upon the judgment so pronounced a decree shall follow. The decree conclusively determines the rights of the parties with regard to matters in controversy. In the instant case, the decree has been passed on 18-7-1995 and, therefore, the property in question has been held to be HUF property on 18-7-1995 which falls in the assessment year 1996-97. The award made by the arbitrator on 30-3-1995 does not represent the final determination of the dispute regarding the title of the property. On this ground also, I feel that the impugned gift tax proceedings are liable to be quashed. 14. For the aforesaid reasons, I am of the considered view that the action of the tax authorities in invoking the provisions of section 4(2) of the Gift-tax Act for 1995-96 under reference is not sustainable on facts and law and the same is, therefore, cancelled. 15. In the result, the appeal of the assessee is allowed. Since there has been a difference of opinion amongst the Members who constituted the Division Bench, the following point of difference is hereby referred to Hon'ble President und....
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....bona fide one" (Please see pg. 712 of the report of ITR 164) which ITAT decided against the assessee in his appeal in wealth tax appeals for assessment years 1991-92 to 1994495. 3. Whether the Tribunal has option to hold that Arbitration Award -pronouncing that "Mohan Niwas" is property of HUF, when the finding of ld. CIT(A) in W.T. appeal that "it is collusive deal" is upheld by Tribunal in W.T. appeals of the assessee pertaining to the assessment years 1991-92 to 1994-95." THIRD MEMBER ORDER Per R.P. Garg, Vice President.-On a difference of opinion between the Members who heard this appeal, the following questions have been referred to me by the President under section 23(11) of the Gift-tax Act, 1958, read with section 255(4) of the Income-tax Act, 1961 for my opinion as Third Member :- PER ACCOUNTANT MEMBER "Whether the action of the tax authorities in invoking the provisions of section 4(2) of Gift-tax Act for assessment year 1995-96 under appeal for bringing to tax the deemed gift is sustainable in the facts and circumstances of the case ?" PER JUDICIAL MEMBER (1) Whether on the facts and circumstances of the case, learned Accountant Member is correct ....
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....UF property, the assessee made a gift under section 4(2) of the Gift-tax Act. He rejected the claim of the assessee that the transaction was a settlement by way of family arrangement by holding that the settlement was not bona fide, it being predetermined and a collusive deal as held by the Tribunal in wealth-tax proceedings of the assessee for assessment years 1991-92 to 1995-96. 4. The ld. Accountant Member, on the other hand, held that there was a dispute about the ownership of the property and the two sons of the assessee held valid title of ownership over the property and in case of dispute and litigation between the assessee and his two sons, for scale was tilted heavily against the assessee. The assessee is an ailing man of 80 years eager to sell the property and lacked energy and patience for protracted litigation with his sons. In such circumstances, the settlement thereof by way of family arrangement was a bona fide family settlement and, therefore, there was no transfer which could attract the provisions of section 4(2) of the Act. In any case there was no gift in the year under consideration at all as it is the date of the consent decree passed by the High Court on w....
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....on (2) in section 4 aforesaid. However, the requirement still remains that it should be an act of the assessee to impress or throw the property. 7. The assessee in this case entered into a family arrangement and the property which was hitherto being declared as individual property in his wealth-tax and income-tax returns was settled to be the HUF property through the arbitration proceedings and 1/3rd thereof was allotted to the assessee on partition. These proceedings, in my opinion, cannot be said to be amounting to impressing the property with that of HUF property or throwing the same into the family hotchpot to which section 4(2) of the Act could be applied. In a case of a family arrangement as held by the Supreme Court in the case of Ram Charan Das v. Girja Nandini Devi AIR 1966 SC 323, each party takes a share in the property by virtue of the independent title which is admitted to that extent by the other party. Every party who takes benefit under it need not necessarily be shown to have, under the law, a claim to share in the property. All that is necessary to show is that parties are related to each other in some way and have a possible claim to the property or even a sem....
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.... that it was originally a joint property of the two sons of the assessee and after getting a part thereof the three daughters of assessee also became the part owners. (ii) Second position is that the value of Mohan Niwas property was being declared by the assessee. In his individual return of wealth-tax and the Income from house property was also being shown in individual returns of income-tax right upto assessment year 1994-95. In the wealth-tax proceedings for assessment years 1991-92 to 1994-95 (WTA Nos. 55 to 58/Ahd./1999), the assessee raised an additional ground claiming that the property belonged to HUF but the same was not pressed, hence rejected. In Miscellaneous Application again the assessee sought rectification on the ground that his aforesaid additional ground was not decided. The MA, however, was rejected by the Tribunal by pointing out the fact that the said additional ground was not pressed at the time of hearing - MA No. 13/Ahd./2001 dated 25-4-2001. This gave an impression that it was individual property of the assessee and held in the benami names of the two sons. (ii) In 1976, in the proceedings under Urban Land Ceiling Act, 1976, a third position was depi....
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....uardian or head of the family. It was at his own peril. Further, that by itself, in my opinion, could not make the assessee owner of the property in view of more weighty material on record against him namely, property stands in the names of the two sons and three daughters and the assessee, its entry in Revenue records in the name of the two sons and three daughters and the provisions of Benami Transaction (Prohibition) Act, 1988 barring any suit, claim or action to enforce any right in respect of any property held benami against the person in whose name it stands or who claims through him - see in this connection the provisions of that Act and the two Supreme Court decisions. Section 4 of the Benami Transactions (Prohibition) Act, 1988 provides that "no suit claim or action to enforce any right in respect of any property held benami against the person in whose name the property is held or against any other person shall lie by or on behalf of a person claiming to be the real owner of such property." The Supreme Court in the case of Mithilesh Kumari considering this section observed "this naturally relates to past transactions as well." The expression "any property held benami" is n....
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....ntire property or to even a part thereof was devoid of any merits. In my opinion, neither the conduct of the assessee nor any material on record show any doubt that he had any predetermined bad motive in agreeing to refer the matter for settlement through the intervention of the Court which appointed the sole arbitrator, a person being a leading advocate of the time. Looking to the precarious position about the rights in the property, particularly when the property stood in the name of the assessee and the provisions of Benami Transaction (Prohibition) Act depriving him to claim any right in such property, it cannot be said that his agreeing to the position that the property be treated as HUF property was collusive or pre-determined because in any case he is getting l/3rd property as against almost Nil chances or his getting anything. 12. In the Tribunal's order in wealth-tax proceedings for assessment years 1991-92 to 1994-95, the issue as to whom the property belonged, was not there as is evident by the ground extracted in paragraph 2.6 of the aforesaid order. The following were the questions stated to have been raised before the Tribunal:- "2.6 Aggrieved by the order of th....
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....nder section 5(1)(iv) and/or under section 5(vi) of the W.T. Act in respect of bungalow constructed on plot No. 417/1/1. The remaining two sub-plots namely plot No. 417/1/2 and 417/1/4 cannot be treated as land appurtenant to even as per principle laid down by Hon'ble Madras High Court and Madhya Pradesh High Court. On the remaining plots independent bungalows/residential house can be built, these are having separate approach roads, duly approved by Municipal Corporation as plots for separate residential units. Therefore, in our opinion, learned CIT(A) is fully justified in holding that these two sub-plots are urban land within the meaning of W.T. Act. Looking to the totality of the facts and circumstances of the case and reasons recorded by learned CIT(A) in her impugned order. We are of the opinion that her order is legally and factually correct and no interference is called for. We, therefore, decline to interfere." 14. It seems that before the CWT(A) the dispute was raised as to whether the entire land was one and appurtenant to the bungalow "Mohan Niwas" which was claimed to be exempt under section 5(1)(iv)/5(1)(v) of the Wealth-tax Act. In that connection, the assessee's s....
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.... parties have agreed before me that my Award need not contain any reasons I refrain from giving the same in support of the Award." (v) The fifth point is that the assessee agreed to the award without challenge by any of the parties. That is insofar as the assessee is concerned, was a wise decision, lest he be not exposed to have any right in the said property. (vi) The sixth point conforms it to be a family settlement which could have been without recourse to Court proceedings. Family settlement excludes the transaction out of the concept of transfer and deemed gift under section 4(2) of the Gift-tax Act. Intervention of the Court is a subtle way of settling disputes without future retractions and fall-outs. (vii) The seventh point is that the award was given on 30th March, 1995 and the property was sold on 1st April, 1995 within two days even without waiting for the award being confirmed by the Court which, according to the CWT(A), happens only in collusive transactions. When the dispute was settled amongst the parties by way of settlement, there is no scope of its being not approved and made rule of the court and if the parties agree to sell the property at the earliest ....
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....ssee i.e., the real position about the ownership was fluid and not certain - a valid ground for entering into a family settlement or an arrangement. (xii) The twelfth point is that the arbitrator instead of allocating movable property to all, allocating only to the assessee which shows that there was no genuine dispute. The dispute was for the claim in Mohan Niwas property and that was main, dominant and substantial part of the property in which they have taken l/3rd share. If they did not take any share in the small property of insufficient value, it does not matter much or make the award invalid which is again an agreed one without any dissent. 16. In view of the above, in my opinion, the discussion in wealth-tax proceedings is of no help in determining the issue about the absolute ownership of the assessee and in holding on that basis that there was a gift within the meaning of section 4(2) of the Act. It only throws some light that it was not HUF property before settlement through arbitration award. On the contrary, it definitely gives conflicting positions the parties have taken at various occasions and that there was a cloud upon the absolute right of the assessee over ....
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....to bona fide and the terms thereto are fair in the circumstances of a particular case, the courts would more readily give assent to such an agreement than to avoid it. 19. In the case of Kale, the Supreme Court held that family settlement must be a bona fide one so as to resolve family disputes and rival claims by a fair and equitable division or allotment of properties between the various members of the family, that the said settlement must be voluntary and should not be induced by fraud, coercion or undue influence and that the family arrangement may be even oral in which case no registration is necessary. The registration would be necessary only if the terms of the family arrangement are reduced into writing. Here also, a distinction should be made between a document containing the terms and recitals of a family arrangement made under the document and a mere memorandum prepared after the family arrangement had already been made either for the purpose of the record or for information of the Court for making necessary mutation. In such a case the memorandum itself does not create or extinguish any rights in immovable properties and is, therefore, not compulsorily registrable. P....
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....with reference to whether the parties who raised disputes or rights or claims in certain properties had in law any such right or not. The members of a joint family may, in order to maintain" peace and bring about harmony in the family, enter into a family arrangement and if the arrangement is entered into bona fide and the terms thereof are fair, courts will normally give assent to such an arrangement rather than avoid it. Even if a party to the settlement had no title under the arrangement but the other party relinquishes all its claims or titles in favour of such a person and acknowledges him to be the sole owner, then the antecedent title must be assumed and the family arrangement will be upheld. Held, that, in the instant case, it was found as a fact that the family arrangement had been brought about by the intervention of the panchayatdars and this clearly showed that the sons and daughters of the assessee were laying claims to the property which the assessee got under the will of her father and it was not relevant at the time when the family arrangement was entered into to find out as to whether such claims if made in a court of law would be sustained or not. If the assess....