OUMMA HABIBA Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) T. C. Nos. 600 to 603 of 1975 relate to income-tax, while T.C. Nos. 605 to 608 of 1975 relate to wealth-tax, in respect of assessment years 1964-65 to 1967-68.

(2.) THE assessee in these cases is a French national residing in Pondicherry. By a document dated September 21, 1963, the assessee and her husband transferred the properties to their children. One of them is a minor daughter by name Miss Nourby. THE income arising from the properties transferred to the minor daughter of the assessee was included in the computation of the total income of the assessee by invoking Section 64(iv) of the I.T. Act, 1961. THE assessee objected to the same and, against the order of the ITO, an appeal was preferred to the AAC contending, (1) that the nationals of Pondicherry are to be governed either by the personal law or by the French Civil Code and the assessee, though a Muslim, could adopt the French Civil Code and be governed by it; and (2) that the document dated September 21, 1963, is not a gift but a transfer of property due to the descendants and the assessee and her husband had disposed of the properties by accelerating the partition and there was actually no gift and hence there was no transfer of assets so as to invoke Section 64(iv). On the first contention, the AAC held that the assessee, without renouncing her personal law, cannot claim to be governed by the French Civil Code. On the second contention, he held that the minor daughter was only a donee and she had no pre-existing right in the property at the time of partition and as there was a transfer of assets to her minor daughter without adequate consideration, Section 64(iv) had been rightly invoked. THE assessee took the matter further by way of appeal to the Income-tax Appellate Tribunal. THE Tribunal posed two points for its determination, namely, (1) whether the assessee and the partition deed dated September 21, 1963, are governed by Section 1075 of the French Civil Code ? and (2) if so, whether under the document dated September 21, 1963, there is no transfer involved by the assessee to her minor daughter and Section 64(iv) is not applicable ? By its order dated November 2, 1974, the Tribunal held that the assessee was competent to opt to be governed by the French Civil Law without renouncing her personal law. As far as the second point is concerned the Tribunal held that there was absolutely nothing to show that the minor daughter had any antecedent right in the properties prior to the date of partition, namely, September 21, 1963, that therefore, the transaction constituted only a gift and that consequently since the properties were transferred without adequate consideration, the income arising therefrom was rightly included in the income of the assessee under Section 64(iv) of the I.T. Act, 1961. On an application made by the assessee under Section 256(1) of the I.T. Act, 1961, the Tribunal has referred the following question of law for the opinion of this court:

(3.) HAVING regard to the language of Sections 1075 and 1076 of the French Civil Code, it is clear that the Tribunal is right in the conclusion which it reached. Before the Tribunal, the only argument that was advanced on behalf of the assessee was that the moment the assessee decided to act under Sections 1075 of the French Civil Code, the assessee had recognised the right of her minor daughter to her share, which she would be entitled on her death, and such a recognition conferred an antecedent title in favour of the minor daughter. We have no hesitation in agreeing with the Tribunal that the said submission had no substance whatever, because it went directly against the letter and spirit of Sections 1075 and 1076 of the French Civil Code to which we have already drawn attention.