K.S. Hegde, J.
1. The question referred to us under section 26(1) of the Gift-tax Act (hereinafter referred to as the 'Act') is 'whether, on the facts and in the circumstances of the case, could the assessee be said to have gifted properties to his sons which attracted tax under the Gift-tax Act'.
2. The following facts have been found by the Tribunal :
(1) The properties both movable and immovable concerned in this case were the self-acquired properties of the assessee;
(2) He divided those properties between himself and his four sons in the year 1954 and delivered to each of his sons shares in his movable and immovable properties;
(3) The partition in the year 1954 was evidenced by an unregistered deed; and
(4) That in the year 1957 he executed a registered partition deed, under which the division effected in 1954 with slight modifications was affirmed.
3. It is the contention of the revenue that under the deed of 1957 the assessee gifted his properties the favour of his sons on November 10, 1957. If that contention is correct, then in view of section 3 of the Act, the gifts in question are eligible to tax.
4. The Income-tax Appellate Tribunal has come to the conclusion that, though the properties with which we are concerned herein were the self-acquired properties of the assessee, he threw them into the common hotchpotch in the year 1954 and thereafter they were impressed with the character of joint family properties; therefore, the partition effected by the assessee in the year 1954 is a valid partition, whether the document executed in proof of the same is valid or not. It also came to the conclusion that the true effect of the 1957 document is one of partitioning the joint family properties and the said document does not evidence any gift.
5. It is now well settled that a member of a Hindu Mitakshara family can throw his self-acquired property into the common hotchpotch and thus impress it with the character of joint family property. In this connection reference may be usefully made to the decision of the Bombay High Court in Kisan singh Mohan Singh Balwar v. Vishnu Balkrishna Jogalekar, and the decision of the Andhra Pradesh High Court in Sadasiva Vittal v. Bolla Rattain. To the same effect is the decision of the Bombay High Court in Commissioner of Income-tax v. M. M. Khanna.
6. It is also well settled now that a member of a Hindu family by means of his unilateral declaration can impress his property with the character of joint family property whether his joint family had any other nucleus of its own or not. The throwing of the individual's property into the common hotchpotch has been held to be possible even when the common hotchpotch is empty, i.e., even if there is no nucleus of the joint family : see the decisions of the Bombay High Court in Commissioner of Income-tax v. M. M. Khanna and Kisan singh Mohan Singh Balwar v. Vishnu Balkrishna Jogalekar. This conclusion receives support from the decision of the Supreme Court in Commissioner of Income-tax v. M. K. Stremann.
7. Form the recitals found in the deed executed in the year 1957 it is clear that the assessee intended to divide his self-acquired properties equally between himself and his four sons. The division in question was made on the basis of Hindu law. That deed further provides that if any property was left undivided, the same shall be of the ownership of the assessee and his four sons. From the facts mentioned above, it is reasonable to conclude that the assessee intended to throw his self-acquired properties into the common hotchpotch and thereafter divide the same in accordance with the principles of Hindu law. Our view in this regard receives support from the decision of the Bombay High Court in Kisansing Mohan Singh Balwar, referred to earlier. While it is true that there must be clear proof of one's intention to give up his right in his properties and throw the same into the common hotchpotch, that intention can be made known by his conduct. There is no prescribed method to have his intention made known. The real question is whether from the proved facts it is reasonable to conclude that he had such an intention. The fact that in some of the decided cases, reference is made to declarations made by the individual concerned does not mean that a formal declaration proclaiming his intention to throw his individual properties into the common hotchpotch is an essential prerequisite for a valid blending. Whether, in a given case, there is blending or not is a matter for the decision of the court on the basis of the available facts.
8. It is clear from the conduct of the assessee in this case that, though he was the absolute owner of all the properties movable and immovable partitioned in the year 1954, yet he intended to deal with the same as if they were his joint family properties. This conclusion of ours gains strength from the fact that in the partition deed entered into in the year 1957, it is specifically recited that if any item of property remained undivided, each of the shares shall be entitled to an equal share therein.
9. The contention of the learned counsel for the revenue that, in the absence of a formal declaration by the assessee that he had thrown his properties into the common hotchpotch, there could have been no blending and the mere purported partitioning of those properties is no proof of the fact that the properties in question had become joint family properties was not supported by any decided case. We do not think that the ratio of the decision of the Madras High Court in S. Parthasarathy v. Commissioner of Income-tax, lends any assistance for that contention. The observations found therein to the effect that there should be a declaration on the part of the individual Hindu to impress his individual property with the character of joint family property pertain to the facts of that case. They do not lay down any rule of law as such.
10. For the reasons mentioned above, we are of the opinion that the Tribunal was right in concluding that, on the facts of this case, it is not possible to conclude that the shares given to the sons of the assessee amount to gifts.
11. For the reasons already mentioned, our answer to the question referred to us is that, on the facts and circumstances of the case, the assessee cannot be said to have gifted properties to his sons under the deed of 1957, nor that the transactions covered by that deed liable to be taxed under the provisions of the Act.
12. The assessee is entitled to his costs of this proceeding. Advocate's fee Rs. 250.
13. Reference answered in favour of the assessee.