S. Obul Reddi, C.J.
1. The short but interesting question that arises inthis reference is whether a half share of the assessee's rights in a medicalshop inclusive of medicines and furniture valued at Rs. 15,000 is taxable under the Gift-tax Act, 1958 (Act No. 18 of 1958).
2. The assessee, Pynda Satti Raju, executed a settlement deed on January 31, 1964, in favour of his daughter's sons who are now the legal representatives of the assessee. Under the terms of the deed, he was to be in possession and enjoyment for life of all the items mentioned in the Schedule and, thereafter, they should devolve upon his grandsons. The item with which we are now concerned is item 5 in the schedule to the settlement deed. That item reads :
'Half share of my rights in the medical shop which is carried on in the name of my adopted son, Ramasubramanyam, situated in the 7thWard, Door No. 22, at Pittapuram (in a rented building) and medicines,furniture, etc., valued at Rs. 15,000.....'
3. The case of the assessee throughout has been that it was a gift in futuro and not in praesenti, and, therefore, it was not liable to be taxed. Thatcontention was negatived by all the authorities below. Therefore, the legal representatives of the assessee moved for a reference to this court and the question referred to us is :
'Whether, on the facts and in the circumstances of the case, the gift of 50% share in Subrahmanya Medical Hall was a gift of a future property and consequently a void gift ?'
4. 'Gift' is defined in Clause (xii) of Section 2. It 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. 'Transfer of Property' is again defined in Clause (xxiv) of Section 2 and it means :
'Any disposition, conveyance, assignment, settlement, delivery, payment or other alienation of property and, without limiting the generality of the foregoing, includes--.....
(b) the grant or creation of any lease, mortgage, charge, easement, licence, power, partnership or interest in property ;.....'
5. 'Property 'is defined in Clause (xxii) of Section 2 to include any interest in property, movable or immovable.
6. The definitions given above will, therefore, take in any interest in property whether movable or immovable. Section 4 further enlarges the scope of gifts by including certain transfers. The intention of the donor was to effect a transfer in praesenti of his proprietary interest to the extent of his share in the medical shop. What he reserved for himself is only a limited right to enjoy the profits for the duration of his life. That limited right which he exercised will not make it a gift in future.
7. A Full Bench of the Allahabad High Court in Lallu Singh v. Gur Narain AIR 1922 All 467 considered the question of the validity or otherwise of a deed of gift executed by one Tulsha Kunwar in favour of her only daughter. In the document, it was recited that the donor wished to give the entire property in seven villages to her daughter, but inasmuch as during her lifetime she had also to provide for her own maintenance, she considered it necessary to remain in possession of three out of those villages for her life, meeting the expenses of her maintenance and other necessary expenses from the profits thereof. Mears C.J., who spoke for the Full Bench, observed (page 471):
'A Hindu widow who is the full proprietor of immovable property, can by a registered document, duly signed and attested, validly make an immediate gift of it, although she reserves to herself the enjoyment of the usufruct or profits of a part of the property for her lifetime and without retaining any power of alienation over it.
The reservation of a temporary advantage or a limited benefit does not necessarily militate against a complete transfer of the title, and unless there is something in Hindu law which is repugnant to it, it must be upheld.'
8. What is said of immovable property equally applies to movable property, as the expression 'property' includes any interest in property, movable or immovable,
9. A Division Bench of the Madras High Court in S. R. Chockalingam Chettiar v. Commissioner of Gift-tax : 70ITR397(Mad) held that the right to obtain a specified number of right shares under Section 81 of the Companies Act, in a fresh issue of capital is a tangible right and is not interest in future property but in existing property as defined in the Gift-tax Act. In that view, it upheld the order of the Tribunal directing the officer to levy gift-tax on 'the market quotations of the rights'.
10. Mr. W.V.V. Sundara Rao, however, invited our attention to a decision of a Division Bench of this court in Smt. Valluri Janakamma v. Commissioner of Gift-tax : 66ITR255(AP) . The question there was whether a father or manager or coparcener of an undivided joint family can gift away the entire properties belonging to the joint family consisting of himself, his wife and daughter; and it was held that such a gift was invalid. In so holding, Jaganmohan Reddy C.J. (as he then was) followed the decision of the Supreme Court in Guramma v. Mallappa : 4SCR497 , where Subba Rao J. (as he then was) observed :
'It must be remembered that the manager has no absolute power of disposal over joint Hindu family property. The Hindu law permits him to do so only within strict limits.'
11. The present case is not one where the assessee had no power of disposal over the various items of property gifted by him since they are not the properties of any joint family; and it was nobody's case that he could not make a valid gift of the items shown in the Schedule to the settlement deed. Therefore, that decision has absolutely no application at all to the facts of this case. The donor made a transfer of his interest in the existing movable property which included medicines, furniture and other items then valued at Rs. 15,000 to his grandsons who have since come on record as the legal representatives of the deceased assessee. Therefore, in view of the meanings given to the expression 'gift', 'transfer of property', and 'property' in the Gift-tax Act, we have no hesitation in holding that the gift in question is a gift in praesenti and not in futuro.
12. The question referred to us is, therefore, answered in the negative and in favour of the department. There will be no order as to costs.