VALLURI JANAKAMMA SMT Vs. COMMISSIONER OF GIFT TAX

JUDGEMENT

(1.) THIS court had directed the Income-tax Appellate Tribunal, Hyderabad, to state a case on the following question, viz. : Whether, on the facts and in the circumstances of the case, the deed dated December 23, 1957, executed by the assessee in favour of her son, Sriramulu, constituted a transaction of gift under section 2(xii) of the Gift-tax Act liable for assessment

(2.) THE Gift-tax Officer assessed the assessee to gift-tax on this reconveyance. THE assessee pleaded that this conveyance did not come within the purview of the Gift-tax Act as it did not have any of the essential ingredients of a gift, that the first conveyance itself was a sort of sham and faked affair that this device was resorted to because her son started disputing the properties by leading an immoral life, and in order to prevent his ways of vice and wasteful habits, it was considered necessary to transfer the properties to his mother, and that as a consequence, the gift deed dated August 30, 1954, was executed. It was also contended that at the time when Sriramulu conveyed the property by way of gift to his mother in 1954, he had only a daughter and, since the properties gifted belonged to the Hindu joint family, Sriramulu was not competent to gift away the whole of those properties, and at the most the gift could be valid only to the extent of his share. THE Gift-tax Officer rejected this claim of the assessee and held that the gift was valid and consequently assessed her to tax. THE Appellate Assistant Commissioner also negatived the contentions of the assessee, and, having looked into the content of the two gift deeds, he found that there was nothing therein to support the version of the assessee.

(3.) IN the instant case, the gift was made by the divided son, who is the head of his joint family consisting of himself, his daughter and wife, to his mother, who, to all intents and purposes, was not a member of his joint family and the gift was of the entire share which was received on partition. IN the circumstances, the gift is void. We also hold that the transaction admittedly was a nominal one. If so, it need not be set aside. IN any case, the gift deed itself being void, there was no need nor necessity for a second gift deed, which is now sought to be taxed, and consequently, the assessee is not liable for gift-tax on this latter transaction.