COMMISSIONER OF WEALTH TAX TAMIL NADU COMMISSIONER OF INCOME TAX MADRAS Vs. K N SHANMUGASUNDARAM:K N SHANMUGASUNDARAM

JUDGEMENT

(1.) Civil Nos. 1025-1033 of 1982 upon being mentioned taken on Board.

(2.) These appeals by certificate of fitness granted under Section 261 of the Income Tax Act, 1961, and under Section 29 of the Wealth Tax Act, 1957, raise a common question for consideration and, therefore, they are being disposed of by this common order.

(3.) One K. N. Shanmugasundaram, has gifted premises bearing Doors nos. 8, 9 and 12, Karpagambal Nagar, Mylapore, Madras, to his three minor daughters, Padmalochani, Harnsa and Usha respectively by three separate documents. As per the gift deeds the gifts were made on account of the affection which the assessee had for his minor daughters and also the duty which the assessee and his minor son owed to maintain the donees in future in conformity with their family status and dignity and also to give the minor daughters necessary marriage presents and streedhanam at the time of their marriage. The total value of the properties gifted to the three minor daughters is stated to be about Rs. 90,000. 00. The total assets of the assessee amounted to Rs. 13 lakhs. For the Assessment Year 1965-66 the Gift Tax officer made a protective assessment accepting the assessee's contention that the gifts were valid. The Appellate Assistant Commissioner also held that the gifts were valid gifts and gift tax had to be charged on them. No appeal was filed before the Income Tax Appellate tribunal (hereinafter referred to as "the tribunal") against the said order of the Appellate assistant Commissioner. In the income tax assessments of the assessee for the Assessment Years 1965-66 to 1969-70 the incomes from the properties which were so gifted to the minor daughters were assessed in the hands of the assessee. On appeal the Appellate Assistant Commissioner directed the income Tax Officer to exclude the income from the properties in view of his earlier decision about the validity of the gifts made by the assessee. The tribunal, on appeal, upheld the said orders and held that the gifts were not invalid and their income could not be assessed in the hands of the assessee. At the instance of the Revenue the tribunal referred to the Madras High court the following question: