1. Mr. G. F. T. Saldanha and Mr. J. G. X. Saldanha are brothers. Mrs. Maisie Saldanha is the wife of Mr. J. G. X. Saldanha. Master Xavier Saldanha, Master Harold Saldanha and Master Aloysius Saldanha are the children of Mr. J. G. X. Saldanha and Mrs. Maisie Saldanha. Mr. G. F. T. Saldanha and Mr. J. G. X. Saldanha were the partners of a firm, known as M/s. P. F. X. Saldanha & Sons. It appears that Mr. G. F. T. Saldanha was a bachelor. The two brothers, who are the partners of the afore-mentioned firm, executed a settlement deed dated September 3, 1957, under which they settled on the wife and children of J. G. X. Saldanha, certain shares in the five items of properties detailed in the settlement deed. For our present purpose, it is the 5th item which is relevant. The entry relating to that item reads thus :
'All cash, outstandings, securities, actionable claims and other movables, including those of the firm of Messrs. P. F. X. Saldanha & Sons.'
2. Some time after the execution of the settlement deed in question, the parties appeared to have realised that certain mistakes had crept into the settlement deed. Therefore, on March 26, 1958, the donors and the dones purport to enter into a rectification deed, by which they amended the 5th item of the settlement deed, and the amended entry reads thus :
'All moneys either in cash or in banks belonging to the executions.'
3. The II Gift-tax Officer, Mangalore, proceeded to levy gift-tax on the basis that both the deeds dated September 3, 1957, and that dated March 26, 1958, are gift deeds within the meaning of the Gift-tax Act, 1958. The Appellate Assistant Commissioner, in appeal, on the other hand, came to the conclusion that the 1st deed is a gift deed; and that the 2nd deed is invalid so far as the children of J. G. X. Saldanha are concerned, as they were all minors on the date of the execution of that deed, but to the extent Mrs. Maisie Saldanha relinquished her own property thereunder, it must also be deemed to be a gift deed. when the matter went up in appeal to the Income-tax Appellate Tribunal, the Tribunal came to the conclusion that the 2nd deed is merely a deed of rectification and, therefore, no gift-tax could be levied on the basis of that deed. At the instance of the revenue, the questions mentioned above have been referred to this court under section 26(1) of the Gift-tax Act.
4. It is not necessary in this case to examine the correctness of the several conclusions reached by the Tribunal. Suffice it to say that the settlors were of the opinion that certain mistakes had crept into the deed of settlement and therefore they wanted to correct the said deed. The beneficiaries under the deed had no objection for the correction in question. The Tribunal, the final fact-finding body, came to the conclusion that the settlement deed did not correctly represent the intention of the settlors. In other words, the Tribunal accepted the contention of the assessees that the settlors, under item 5 of the settlement deed, never intended to settle on the donees anything other than cash in hand and in banks belonging to them. The Tribunal also came to the conclusion that the rectification deed was executed solely with a view to correct the mistakes that had crept into the settlement deed. For arriving at that conclusion, the Tribunal gave several reasons, some of which at least are unquestionable. For example, the Tribunal came to the conclusion that the settlors are very respectable persons; there was no intention on their part to evade tax; the firm having been in existence, it could not have been their intention to settle on the donees outstandings, securities, actionable claims and other movables of the firm. It may be noted that at the time the deed was executed, the securities as well as other outstandings and actionable claims of the firm had been pledged to the banks. The Tribunal also opined that the operation of the firm would have become extremely difficult, if not impossible, if there had been any settlement of any portion of the outstandings, securities, actionable claims and other movables belonging to the firm. Prima facie, these are convincing grounds for coming to the conclusion that mistakes had crept into the settlement deed. It is true that, in addition to these conclusions, the Tribunal had also pond that the transfer in respect of outstandings, securities, actionable claims and movables are either opposed to the provisions of the Securities Act or the Partnership Act or the Companies Act. The findings of the Tribunal in that regard may be open to debate. But, even if we exclude those findings from consideration, the fact remains that the Tribunal has, on relevant grounds, come to the conclusion that the rectification deed was executed solely with a view to correct the mistakes that had crept into the settlement deed. This much alone is sufficient to answer the questions referred to us in favour of the assessee.
5. In our opinion, that in order to find out the real gifts under the settlement deed, one has to take into consideration not only the settlement deed, but also the rectification deed. In our judgment, the two deeds are parts of the same transaction. They have no independent existence. They do not represent two independent transactions. On that point, we are wholly in agreement with the Tribunal.
6. For the reasons mentioned above, our answers to the questions submitted to us are as follows :
1. (a) the second document is only a rectification of the first.
7. In view of our above conclusion, it is unnecessary to answer the remaining two questions.
8. In the circumstances of the case, we make no order as to costs.