COMMISSIONER OF INCOME TAX Vs. RAM GOPAL RAJGARHIA

JUDGEMENT

(1.) ON applications being filed on behalf of the Commissioner of Income-tax, Bihar, for stating the case and making reference to this court, the Tribunal, in exercise of the power conferred on it by Sub-section (1) of Section 256 of the I.T. Act, has referred the following questions of law arising out of its order :

(2.) THE assessee-opposite party is an HUF which derives income from interest, dividend, etc. It appears that one Jhohar Mull had two sons, Rai Saheb Sundar Mull and Ram Kumar. Rai Saheb Sundar Mull had six sons. Partition took place in the family of Rai Saheb Sundar Mull. THE assessee, Ram Gopal Rajgarhia, who is one of the sons of the said Rai Saheb Sundar Mull, apart from other properties, received 62 shares of India Mica Supply Company Ltd. In 1951, he purchased three further shares, and, as such, he held 65 shares in the aforesaid company. In the year 1952, he gifted 35 shares out of the aforesaid 65 shares to his minor son, Vijoy Kumar Rajgarhia. For the assessment years after 1953-54, the assessee returned the dividend on 30 shares only and assessment orders were passed. But, subsequently, the ITO initiated a proceeding under Section 147(a) of the Income-tax Act, 1961 (hereinafter to be referred to as "the Act"), on the ground that the asses-see as the karta of the HUF, could not have made a gift in favour of his minor son. On that view, he included the dividend received by Vijoy Kumar Rajgarhia on the basis of the gift aforesaid, in the total income of the assessee. THE action of the ITO was questioned in appeals but the AAC affirmed the same. THEreafter, appeals were preferred before the Income-tax Appellate Tribunal, THE Tribunal came to the conclusion that the gift of 35 shares by the assessee in favour of his minor son was a valid one, and the dividends received on the gifted shares could not be included in the total income of the assessee. THE five taxation cases relate to five assessment years beginning from 1959-60 and ending with 1963-64 and as common questions of law and facts are involved they were heard together and are being disposed of by a common judgment.

(3.) ON that view, the gift made in that case was upheld because it was within a reasonable limit and for a pious purpose. From the judgment it appears that the gift was also in respect of immovable property and perhaps because of that test about the pious purpose had to be fulfilled.