K VENUGOPAL Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) AT the instance of the assessee, the following question of law has been referred to this court for opinion :

(2.) THE deceased assessee was an individual. He filed returns of his income for the assessment year 1982-83 declaring his income at Rs. 20,450. THE Income-tax Officer added an amount of Rs. 34,550 to this income under Section 64(1)(v) of the Act as an amount of Rs. 3,40,000 was received by the assessee's son under a family settlement dated April 1, 1981, and it amounts to transfer without consideration and consequently a gift and so, the interest accrued on this amount gifted by the assessee to his minor son is liable to be added to the income of the assessee under Section 64(1)(v). THE assessee appealed to the Appellate Assistant Commissioner and contended that the settlement would not amount to transfer and adding of interest accrued on this amount to the income of the assessee under Section 64(1)(v) is not justified. THE Appellate Assistant Commissioner rejected the contention of the assessee and dismissed the appeal. On further appeal to the Tribunal, the Tribunal held that the transaction would amount to transfer and not a family arrangement and the properties were the absolute properties of the assessee and the deed of settlement was not a bona fide one as there was no dispute among the family members and so, this amount of Rs. 3,40,000 settled by the assessee on his minor son under the deed of settlement amounts to transfer. Accordingly, the Tribunal was of the view that the transfer is without consideration and it amounts to a gift to the minor son of the assessee and, consequently. THE interest accrued on such gifts should be added to the income of the asses-see under Section 64(1)(v) and accordingly dismissed the appeal.

(3.) IN the case of CIT v. Ponnammal [1987] 164 ITR 706 (Mad), it has been held that (headnote) :