1. This is a reference made by the Income-tax Appellate Tribunal, Madras, Bench, at the instance of the assessee under section 26(1) of the Gift-tax Act, to be hereinafter referred to as the 'Act'. This reference arises out of the Tribunal's order in G.T.A. No. 103 of 1960-61, dated 12th November, 1962.
2. The learned judge set out the statement of case which ran as follows :
3. The applicant, Nanjiah Setty, his only son, Gangadhara Setty, and the four sons 'through' the latter originally constituted a Hindu undivided family, which owned mainly movable properties in the shape of shares in the limited companies and an item of immovable property. By an instrument dated 1st March, 1956, the members of the family aforesaid declared their intention to remain divided in status from the joint family which was followed up by a registered deed of release dated 15th March, 1956, dividing the properties by metes and bounds. About 1st March, Gangadhara Setty's wife was enceinte. A male child called Lakshminarayanan was subsequently born to Gandhara Setty on October 21, 1956. A copy of the instrument of declaration dated March 1, 1956, is annexed as annexure 'A' and forms part of the case. A copy of the deed of release dated March 15, 1956, is annexure 'B' and forms part of the case.
4. The total value of the movable properties as per books was Rs. 15,72,340. For purposes of partition the market value was ascertained at Rs. 15,26,473. The division was as under :
Rs. Rs. Rs. Rs.Nanjiah Setty ... 7,63,530Gangadhara Setty (son)... 1,51,239Grandsons :Ramkumar ... 1,50,900Giridhar ... 1,50,900Vijayakumar ... 1,50,900Kasinath ... 1,50,900--------- 6.03,600Granddaughters :Shyamala ... 37,725Srivalli ... 37,725--------- 75,450-------- 6,79,050--------- 8,30,289----------
5. The value of the immovable property was Rs. 16,500 and it was retained by Nanjiah Setty. For retaining the shares of others he paid cash as under :
Rs.Gangadhara Setty (son) ... 1,500RamkumarGiridhar GrindsonsVijayakumar Rs. 1,500 eachKasinath ... 6,000Granddaughters :Shyamala &Srivalli; Rs. 375 each ... 750--------8,250--------
6. On October 25,1957, a family arrangement was arrived at by which Nanjiah Setty transferred shares worth Rs. 1,46,500 to Lakshminarayanan, the grandson born after the date of partition. A copy of this family arrangement dated October 25,1957, is annexure 'C' and forms part of the case.
7. In the assessment for the year 1958-59 the Gift-tax considered that this transfer to property of the value of Rs. 1,46,500 by the assessee to Lakshminarayanan was a gift. His reasons for coming to that conclusion were :
(1) that though no doubt the new born child had a right to share in the family properties, that right could only be enforced against the properties allotted to his brothers and father on partiton;
(2) that the settlements made on the 25th of October, 1957, were not in discharge of any liability but only a gift with consideration; and
(3) that there was no reservations in the partition in March, 1956, about provision for Lakshminarayanan.
8. On the appeal, the Appellate Assistant Commissioner held :
(1) that when, under Hindu law, a partition takes place the father and son were entitled to equal shares but, as between the members of the same branch, the division was per capita;
(2) that the division between Gangadhara and his children was strictly in accordance with the legal rights and the law obtaining in Mysore by which female members also got a share.
(3) that the intention of the parties was to divide the properties in accordance with their respective legal rights and unequally;
(4) that for retaining the immovable property, the assesee gave the value of the half share which assessee was entitled, i.e. Rs. 16,300.
(5) that the assessee had not retained any large share for any contingency;
(6) that there was no necessity to realign the shares because a grandson had been born to the assessee, the realignment becoming necessary only if there was after-born son to the assessee.
(7) that the grandson, Lakshminarayanan, had no enforceable right against the assessee;
(8) even though there was no necessity for reopening the partition, even if it was done, there was no liability on the assessee to transfer even a single naye paise from his share to his grandson;
(9) in view of the fact that the assessee got no more than what was his due, there was no consideration for the present settlement by the assessee on his grandchil; and
(10) that the transfer was not in satisfaction of any rights accruing to the grandson as on partition becoming necessary.
9. He upheld the Gift-tax Officer's order, which is annexure 'D' and forms part of the case. A copy of the Appellate Assistant Commissioner's order is annexures 'E' and forms part of the case.
10. On appeal before the Tribunal it was urged.
(1) that there was only one petition between the assessee, his son and grandchildren and when a grandchild was born later, an adjustment of rights became necessary;
(2) that the assessee and Gangadhara Setty and grandsons all formed a coparcenary and there was a petition between all the members of thecoparcenary; (3) that Lakshminarayanan on coming to the family in 1956, got a right to a share in the family properties and that as this had been not provided for in the partition in March, 1956, a reopening of that partition was necessary and to avoid disputes, a settlement was arrived at between the members of the family by which the assessee gave properties of the value of Rs. 1,46,500 to Lakshminarayanan to equalise his share with that of his brothers;
(3) that the settlement deed of 25th October, 1957, conferred no new rights upon Lakshminarayanan but only recognised a pre-existing one;
(4) that Lakshminarayanan got his properties under the aforesaid deed by virtue of right by birth in the family and not by a gift;
(5) that the assessee was under the legal duty to give a share to Lakshminarayanan and having failed to do that, made good by giving a share, which he would have been entitled to by a settlement deed and no gift had been made; and lastly
(6) that if there was a reopening of the partition it would not be open to the assessee to contend that all the properties allotted to him at the prior partition would remain with him and the minor should be asked to proceed only against his father, Gangadhara Setty, and the other sons.
11. It was held that there was no obligation on the part of the applicant to allot properties to Lakshminarayanan and that Lakshminarayanan if he had any right could only proceed against the properties allotted to his father, Grandfathers Setty, and his sons. So holding, the Tribunal constructed the family arrangement dated October 25,1957, between the parties as a transfer of the movable properties by the assessee in favour of his grandson, Lakshminarayanan, amounting to a taxable gift and sustained the original assessment. A copy of the Tribunal's order is annexure 'F' and forms part of the case.
12. The question of law is :
'Whether on the facts and in the circumstances of the case, the assessment for the year 1958-59, of the allotment of the movable properties of the value of Rs. 1,46,500 to Lakshminarayanan under the registered family arrangement dated October 25,1957, as a taxable gift under the gift-tax Act, 1958, is valid in law ?'
[After setting out to statement of case, HEGDE J. continued].
13. On the admitted facts, there is no dispute as regards the share given to assessee at the partition, effected on March 15,1956. That being so, minor Lakshminarayanan could have only claimed his share from the properties allotted to his father, brothers and sisters : see Singriah v. Ramanuja  Mys L.J.566; A.I.R. 1959 MYS.239. Hence no liability was case on the assessee to make good the share due to Lakshminarayana. The assesse has given a sum of Rs. 1,46,500 to minor Lakshminarayanan in the form of share and cash entirely from out of his share, for which, he (assesssee) has not received any consideration. It is true that in return for receiving the amount and s hers in question, Lakshminarayanan is required not to claim any share from his father, brothers and sisters. In other words, the real beneficiaries under the deed dated October 25,1957, are Gangadhara, Ramkumar, Giridhar, Vijayakumar, Kasinath, Shyamala and Srivalli.
14. Sri. V. Krishnamurthy, the learned counsel for the assessee, is right in his contentions that approached form the point of view of the transfree the concerned transaction amounts to a transfer for consideration. But, viewed from the point of view of the assessee, it is a transfer without consideration. Hence, we have to see whether the same amounts to a 'gift' as defined in section 2(xii) of the 'Act' 'Gift' is defined under that clauses as follows :
'Gift' means the transfer by one person to another of any existing movable or immovable property made voluntarily and without consideration in money or money's worth, and includes the transfer of any property deemed to be a gift under section 4.'
15. The definition of the word 'gift' found in the 'Act' differs substantially from the definition given in section 122 of the Transfer of Property Act, 1882.
From the definition given in the 'Act' it is clear that any transfer from one person to another made without consideration in money or money's Worth amounts to a gift. There is hardly any doubt that though the transfer made by the assessee was without consideration in money or money's worth, he might have had other considerations in making the transfers. That is not relevant for the purpose of the 'Act'.
16. For the reasons mentioned above, our answer to the question referred to us is against the assessee. In other words, our answer is that, on the facts and in the circumstances of the case, the transfer of the movable properties of the value of Rs. 1,46,500 to Lakshminarayanan under the registered family arrangement dated October 25,1957, is a taxable gift under the 'Act'. The assessee to pay the costs. Advocate's fee Rs. 250.