COMMISSIONER OF GIFT TAX Vs. JAGDISH SARAN

JUDGEMENT

(1.) THE question for consideration in this gift tax reference is whether conversion of self-acquired property into joint family property constitutes a 'gift' under the Gift Tax Act, 1958, hereafter referred to as the Act Sri Jagdish Saran is the assessee. He carried on contract business and some brick kiln business at Saharanpur. Till the assessment year 1957-58 he was assessed as an individual. He possessed certain self-acquired property. In his account books there was an entry dated 31-3-1957 to the effect that in future the business of brick kiln would be the property of himself and his sons, that is to say, the Hindu undivided family. It was also noted that the money invested in the brick kiln to the extent of Rs. 69,174/14/3, shall be the property of the joint family from that date. On 2-4-57 an agreement was entered into between Sri Jagdish Saran, his sons and his wife. It was stated in the agreement that the family shall carry on the business of brick kiln and income arising therefrom shall be exclusive property of the joint Hindu family. THE Gift Tax Officer took the view that this transaction constituted a gift, Sri Jagdish Saran was, therefore, assessed to gift tax. This view was upheld in appeal by the Appellate Assistant Commissioner. But the assessee succeeded before the Appellate Tribunal. THE Tribunal held that there was no gift involved in the transaction. THE appeal was allowed; and assessment of gift tax was cancelled.

(2.) AT the request of the Commissioner of Gift Tax, Lucknow the Appellate Tribunal has referred the following question of law to this Court:--

(3.) IN Commr. of INcome Tax Gujarat v. Keshav Lal Lallubhai Patel, AIR 1965 SC 866 it was held that partition of joint Hindu family property is not a transfer in the strict sense. That question came before the Supreme Court in a reference under the INcome Tax Act. The connected question whether the act of throwing self-acquired property into the hotch-pot is a transfer or not was left, open.