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Smt. Kishan Devi Vs. Gift-tax Officer - Court Judgment

LegalCrystal Citation
CourtIncome Tax Appellate Tribunal ITAT Delhi
Decided On
Judge
Reported in(1982)2ITD540(Delhi)
AppellantSmt. Kishan Devi
RespondentGift-tax Officer
Excerpt:
1. this is an assessee's appeal against the order dated 23-1-1980 passed by the commissioner (appeals) in appeal no. 83 of 1979-80. he had confirmed the decision of the gto and dismissed the assessee's appeal filed before him. the facts leading up to the present appeal may be briefly stated as follows.2. the assessee kishan devi is the wife of one bhagirath mal. kishan devi and bhagirath mal had three sons, namely, amar nath, jai nath and prem nath. bhagirath mal died on 29-4-1953 leaving behind him his separate properties and also his widow and three sons as his heirs.kishan devi filed a suit on 18-3-1953 for partition and separate possession of her share of properties left behind by her husband. it was later numbered as suit no. 156 of 1955 on the file of the sub-judge, 1st class,.....
Judgment:
1. This is an assessee's appeal against the order dated 23-1-1980 passed by the Commissioner (Appeals) in Appeal No. 83 of 1979-80. He had confirmed the decision of the GTO and dismissed the assessee's appeal filed before him. The facts leading up to the present appeal may be briefly stated as follows.

2. The assessee Kishan Devi is the wife of one Bhagirath Mal. Kishan Devi and Bhagirath Mal had three sons, namely, Amar Nath, Jai Nath and Prem Nath. Bhagirath Mal died on 29-4-1953 leaving behind him his separate properties and also his widow and three sons as his heirs.

Kishan Devi filed a suit on 18-3-1953 for partition and separate possession of her share of properties left behind by her husband. It was later numbered as Suit No. 156 of 1955 on the file of the Sub-Judge, 1st Class, Delhi. While the suit was pending, a reference was made to arbitrators, Harichand and Hari Shankarlal through court on 16-10-1955. The arbitrators filed their award into the court. No objections were filed by the parties to the suit against the said award. Hence, the said award was made into a rule of the court on 21-11-1955.

3. The following sentences in the award may be useful and so they are extracted as under : It was represented before us by Shri Amar Nath, Shri Jai Nath and Shri Prem Nath that before the death of their father, Bhagirath Mal, the respective parties in the suit had their personal properties which had all along been treated as such by the income-tax authorities.

Each party shall hold himself or herself one-fourth of the said property and shall hold the same as 'tenant-in-common' as they have been holding since first day of May, one thousand nine hundred and fifty-three.

The parties shall possess and enjoy the one-fourth share of the properties in severalty, to the exclusion of each other without any let or hindrance from one another.

Provided always that the proprietary rights of Smt. Kishan Devi, plaintiff, shall be a 'life interest' only ceasing on her demise, when the inheritance of the same shall open and shall be in accordance with the provisions of Hindu law.

4. Thus, it can be seen that Kishan Devi was granted one-fourth undivided share in the said properties, which included a valuable property called 'Bhagirath Palace'. However, under the terms of the award, Smt. Kishan Devi was granted only life interest in the suit properties. It was made clear that she can enjoy her right as a tenant-in-common. So also the sons of late Bhagirath Mal were each granted one-fourth undivided share in all the suit properties. The following portion of the award also is felt important and so it is extracted as under : Now it is not possible and admissible to divide the properties by metes and bounds and as the plaintiff is already in possession and enjoyment of one-fourth of the property as 'tenants-in-common' from 1-5-1953, she is entitled to no relief and this suit shall stand dismissed.

Thus, as per the terms of the award, the suit filed by Smt. Kishan Devi was dismissed.

5. Subsequently, on 5-9-1969, Kishan Devi made a declaration through an affidavit. A copy of the affidavit is provided at pages 5 and 6 of the paper book. In the said affidavit it is stated that the properties detailed in para 2 of the affidavit have all along been intended as belonging to the joint family consisting of herself and her three sons with the right of survivorship and of all other incidents of undivided coparcenary. Now she is ultimately bringing her right in those properties into the common hotchpot of the joint family with complete intention of abandoning all her separate claims upon the said property.

She declares that the ownership of the said properties belongs to the undivided family consisting of herself and her three sons.

6. Soon on the heels of the said declaration, one of her sons, Shri Jai Nath, filed a suit on 14-9-1969 on the original side of the Delhi High Court against his two brothers and Kishan Devi, seeking a preliminary decree for accounts of the income of the properties and for partition and separate possession of his one-third share in the properties as shown in Schedule 'A' of that suit. The suit was later numbered as No.376 of 1979. Copy of the original plaint filed by Jai Nath was filed at pages 9 and 10 and copy of the amended plaint in the same suit was provided at pages 11 to 15 of the paper book, filed before us. As per the amended plaint, Kishan Devi was pleaded as 7th defendant in the suit. The following averment was made at para 3 of the amended plaint: That Lala Bhagirath Mal died on 29-4-1953. After the death of Lala Bhagirath Mal the three sons of Lala Bhagirath Mal and defendant No. 7 partitioned the joint Hindu family properties and disrupted the joint Hindu family. They become owners of the properties detailed in Schedule 'A' in equal shares, i.e., one-fourth share each. The plaintiff No. 1 represented his family consisting of himself and his sons, plaintiff Nos. 2 to 5, defendant No. 1 represented himself and his sons, defendant Nos. 2 and defendant No. 3 represented himself and his 3 sons, defendant Nos. 4 to 6.

The said suit ended in a compromise. The compromise petition by all the parties to the suit was filed on 15-1-1970 into the Court. Defendants 5 and 6 were minors. Permission was taken by Shri Prem Nath to enter into compromise on behalf of his minor sons. The permission was duly granted by the High Court. A copy of the compromise petition was provided at pages 18 to 24 of the paper book filed before us. The judgment of the Delhi High Court in pursuance of the compromise is provided at pages 16 and 17 of the paper book. One of the compromise terms with which we are concerned is as follows : That defendant No. 7 has made a declaration on 5th September, 1969, throwing her one-fourth share in the properties, shown in Schedule 'A' annexed herewith, in the common hotchpot of the joint family.

She will not have any right, title or interest in the said properties. She will, however, be paid Rs. 200 per month each by the plaintiffs, defendants 1 and 2 and defendants 3 to 6 till such time she is alive. She will not be liable to pay any liabilities of the joint Hindu family except the liability of the Central Bank.

The GTO gave notice under Section 16 of the Gift-tax Act, 1958 ('the Act') to the assessee and in pursuance of the said notice, return dated 10-8-1973 was filed declaring the value of the gifts at 'nil'. The GTO, however, considered that the declaration of Kishan Devi on 5-9-1969 as well as the High Court compromise decree dated 15-1-1970 would operate as gift of the properties held by Kishan Devi to her sons. The GTO had taken the whole value of the property as given out in the Schedule to the compromise petition dated 15-1-1970 at Rs. 11,36,750. The GTO also found that the said valuation is based on a valuer's report. Therefore, taking it as the correct valuation of the property, the one-fourth share of Smt. Kishan Devi in the said property, was taken to be of the value of Rs. 2,84,188 and ultimately by his assessment order dated 19-3-1979, assessed the assessee to gift-tax on the said amount. Before the date of the assessment order Smt. Kishan Devi died. Her sons were added as her legal representatives in the assessment proceedings.

Aggrieved by the assessment made by the GTO the assessee preferred an appeal to the Commissioner (Appeals) in appeal reference mentioned in the opening paragraph of this order.

7. It is contended before the Commissioner (Appeals) that the declaration of Kishan Devi dated 5-9-1969 does not amount to a gift according to the decision of the Delhi High Court in CGT v. Munshi Lal [1972] 85 ITR 129, as Kishan Devi was not a coparcener and she had no power to blend her property with that of the coparcenary property. It was also contended that Kishan Devi cannot be said to have effected a gift through the medium of the compromise decree dated 15-1-1970 and in support of that contention, certain observations made in IT Appeal No.3395 of 1975-76 which is the appeal preferred by this very assessee relating to the assessment year 1970-71 were cited. The cited portion of the order is as follows : Before I part with this case I wish to make it clear that the ITO's view that the action of the assessee of throwing her self-acquired property into the common hotchpot amounted to a gift within the Gift-tax Act, is patently incorrect in view of the decision of the Delhi High Court in CGT v. Munshi Lal [1972] 85 ITR 129. I have to make this observation because sufficient time had been spent to show that the ITO's view was incorrect in stating that there was a gift.

In fact at one stage it was pointed out that the ITO was not consistent in his conclusion because when he said there was a gift, he could not assess the income from that gifted property in her hands and on account of this contradiction his order should not be approved.

The arguments advanced on behalf of the assessee were not accepted by the Commissioner (Appeals). The learned Commissioner held that the earlier decision of the Delhi High Court in CIT v. Pushpa Devi [1971] 82 ITR 7 was not overruled in Munshi Lal's case (supra). Further he observed that the decision of the Delhi High Court in Pushpa Devi (supra) was followed by the Mysore High Court in the case of CIT v. Dr.

(Mrs.) Sita Bhateja [1973] 91 ITR 193. The learned Commissioner found that there was no joint family between Kishan Devi and her sons. He further found that the family stood completely disrupted even on the date of the award dated 16-10-1955 which was made the rule of the Court on 21-11-1955. He further held that on the authority of the decision dated 2-5-1977 of the Tribunal, Delhi, in IT Appeal No. 3395 of 1975-76 in Smt. Kishan Devi's case, relating to the assessment year 1970-71 and the Delhi High Court's decision in Pushpa Devi' case (supra), no legal consequence flowed from the declaration of Kishan Devi dated 5-9-1969.

However, the learned Commissioner construed the compromise decree dated 15-1-1970 as a devise through which Smt. Kishan Devi transferred her one-fourth interest in the property to her sons for inadequate consideration and so the said transaction was to be construed as a gift within the meaning of Clause (xii) of Section 2 read with Clause (xxiv) of Section 2 and Section 4(1)(a) of the Act. At para 23 of his order he concludes as follows : The conclusion is, therefore, inescapable that the so-called compromise deed constitutes the record of a transfer of her properties made by Smt. Kishan Devi in favour of her sons for inadequate consideration and that the said transaction constitutes a gift within the meaning of Clause (xii) of Section 2 read with Clause (xxiv) of Section 2 and Section 4(1)(a) of the Gift-tax Act, 1958 and that the ratio of the Supreme Court's decision in Goli Eswariah v. CGT [1970] 76 ITR 675 is not applicable here. The GTO's action in bringing the gift to tax is, therefore, correct in law.

The first three grounds of appeal are, accordingly, rejected.

8. Thus, having failed even before the Commissioner (Appeals), the assessee is now in second appeal before this Tribunal and thus the matter stands for our consideration.

9. We have heard Shri O.P. Vaish and Shri M.S. Syali, the learned advocates for the assessee, and Shri S. Ramaswamy, the learned departmental representative for the revenue. On behalf of the assessee a paper compilation consisting of pages 1 to 34 was filed before us.

There are only 5 grounds raised in this appeal. Out of them the second ground is as follows : That on facts and circumstances of the case and in law the learned CGT (Appeals) erred in upholding the order of the GTO to the effect that the passing of the properties valued at Rs. 2,84,188 under declaration dated 5-9-1969 to the sons of the appellant, constituted a gift taxable under the Gift-tax Act.

We feel that the second ground is formulated on a wrong presumption of facts. The learned Commissioner nowhere in his impugned order held that the declaration of Smt. Kishan Devi dated 5-9-1969 amounted to a gift.

As already stated above, the learned Commissioner held that the declaration of Kishan Devi dated 5-9-1969 has no legal consequences. If by the above ground the assessee seeks to argue that the declaration dated 5-9-1969 is operative and the properties worth Rs. 2,84,188 passed on to the sons only through that document, then we cannot approve that argument and it is liable to be rejected at our hands.

Firstly, in IT Appeal No. 3395 of 1975-76 which represents the assessee's own case for the assessment year 1970-71, it was held, at the close of para 5 of the order, that the declaration made by Kishan Devi in this case does not amount to blending the self-acquired property of Smt. Kishan Devi with that of the joint family of herself and her sons. It is stated that the present case is squarely covered by Pushpa Devi's case (supra). It was further held that a female member of the joint family cannot throw her self-acquired property into the common hotchpot. The income derived from the one-fourth share of Smt.

Kishan Devi is liable to be assessed in her own hands and the declaration made by her should be ignored, as it has no effect in law.

We fully approve the said finding, given by a single member of this Tribunal, and consequently, we hold that the declaration dated 5-9-1969, made by Kishan Devi, is not valid, and has no effect in law.

Further the decision of the Delhi High Court in Pushpa Devi's case (supra) was also approved by the Supreme Court in Pushpa Devi v. CIT [1977] 109 ITR 730 as far as this point is concerned. Considering the eligibility of a female member of the joint family to blend her separate property with that of the coparcenary property Chandrachud, J.(as he then was) held as follows : To blend is to share along with order, and not to surrender one's interest in favour of others to the exclusion of oneself. If a Hindu female, who is a member of an undivided family, impresses her absolute, exclusive property with the character of joint family property, she creates new claimants to her property to the exclusion of herself because, not being coparcener, she has no right to demand a share in the joint family property by asking for a partition. The expression 'blending' is inapposite in the case of a Hindu female who puts her separate property, be it her absolute property or limited estate, in the joint family stock. (p. 730) 10. It is well settled that a Hindu coparcenary is a much narrower body than Hindu joint family and it includes only those persons who acquire right by birth in a coparcenary property. These are the three generations next to the holder, in unbroken male descent. Thus, in view of the authoritative pronouncement of the Hon'ble Supreme Court on the subject, we do not find any difficulty in holding that Kishan Devi being not a coparcener, she cannot blend her separate property with that, of the so-called joint family property of herself and her three sons and, consequently, we hold that the declaration dated 5-9-1969 has no legal consequence and has to be ignored.

That on facts and circumstances of the case and in law the learned CGT (Appeals) erred in holding that there was actually no joint family as such in existence in which the assessee could throw her property.

It is the contention of the assessee that there is ample evidence on record to prove the existence of a joint family between Kishan Devi and her 3 sons. After carefully perusing the whole record, we are unable to accept this contention. We have already extracted in the previous paras of our order the representation made by S/Shri Amar Nath, Jai Nath and Prem Nath before the arbitrators, who filed their award into court, on 16-10-1955. Copy of the award is provided in pages 2 to 4 of the paper compilation before us. It was never the case of the 3 sons that they constituted a Hindu joint family with their late father. If really they constituted a Hindu joint family with their late father and the suit properties which were the subject-matter of Suit No. 136 of 1955 on the file of Sub-Judge, 1st class, Delhi, were joint family properties, in which Bhagirath Mal was holding only one-fourth share, then there was no reason why the 3 sons as well as the widow were given one-fourth share each in those properties. Further, it was represented by the 3 sons before the arbitrators that they were subjected to income-tax individually, even during the lifetime of their father. There was no evidence whatsoever that Bhagirath Mal and his sons constituted a joint family and the said joint family was subjected to income-tax at any time previously. There is no tota of evidence to disclose any ancestral nucleus as having been held by the said joint family consisting of the 3 sons and Bhagirath Mal. Further, nowhere in the award dated 16-10-1955 it was held that Bhagirath Mal and 3 sons ever constituted a joint family. Even after the death of late Bhagirath Mal, a categorical averment was made in the plaint filed by Jai Nath before the Delhi High Court to the effect that after the death of Bhagirath Mal, his joint family was disrupted and the joint family members partitioned their joint family properties. When that is the real position, the solemn affirmation of Smt. Kishan Devi in her declaration dated 5-9-1969 cannot be given weightage. The statement in the compromise petition, which is already extracted above, should not be mistaken as the judgment of the Court. There is clear indication that the Delhi High Court never treated the suit properties in Suit No. 376 of 1969 as the joint family properties of Kishan Devi and her sons. On the other hand, it had rightly treated those properties only as joint properties held by all the four of them as 'tenants-in-common'. There is an ocean of difference between joint family properties and joint properties though both types are available for partition. In the judgment of the Delhi High Court dated 15-1-1970 the very first sentence reads as follows : This is a suit for partition of the joint property and for rendition of accounts. The parties have compromised the suit and have put in a written compromise. Defendant Nos. 5 and 6 are minors. Prem Nath, their guardian-ad-lit em, the father of the minors, has put in an application for leave to compromise the suit. The application has been allowed and he has been granted leave to compromise the suit.

The compromise has been recorded.

The treatment given by the Delhi High Court to the nature of suit properties in Suit No. 376 of 1979 is quite in consonance with the decree that followed in Suit No. 136 of 1955 on the file of Sub-Judge, 1st class, Delhi. Therefore, we are unable to appreciate the argument by the assessee's counsels that the lower authorities went wrong in holding that there was no joint family existing between Kishan Devi and her 3 sons When there is no joint family, there is no question of throwing the separate properties of Kishan Devi into the common hotchpot. Thus we repel the contentions found in Ground No. 3 of the grounds of appeal.

12. In Ground No. 4 it is contended that, inasmuch as the act of throwing the property in the common hotchpot was an unilateral act of Kishan Devi, it would not result in a gift, liable to tax. This argument is not quite clear. The assessee did not make it clear as to whether the act of throwing the property of Smt. Kishan Devi into the common hotchpot was done by her declaration dated 5-9-1969 or by the compromise decree dated 15-1-1970. If what the assessee means is confined to the declaration dated 5-9-1969, her contention is quite acceptable, and it was nobody's case that the declaration dated 5-9-1969 is operative. However, if the assessee warts to advance an argument that even under the compromise also, it was only Kishan Devi who had blended her property or who had relinquished all her rights to the property and it was her unilateral act, then, we are not in agreement with that contention. The compromise petition is always a result of deliberation among the contestants in the suit and so a compromise petition should always be treated just like a contract which is always a bilateral transaction, a transaction which resulted from a consensus among the parties to the suit. It is significant that not only Kishan Devi but also all her 3 sons as well as her grandsons were parties to the compromise petition dated 15-1-1970 filed before the Delhi High Court. Therefore, this ground also should fail and it should be decided against the assessee.

That, without prejudice, the value of the gift taken at Rs. 2,84,188 is highly excessive and arbitrary.

It is sought to be argued by Shri O.P. Vaish that assuming for a while that there is a gift from the mother to the sons, it is only the life estate of the mother in the property which could be conveyed or gifted to her sons. In that case, the life estate held by her in this property only should be assessed after fairly estimating its value. However, the lower authorities took the whole value of her share in the properties which is quite unjust. In that sense the gift taken at Rs. 2,84,188 is termed as highly excessive and arbitrary.

14. We have given deep consideration for this argument. It is no doubt true that a transferor cannot transfer more rights than what she has.

However, we are unable to agree with Shri O.P. Vaish when he argues that Kishan Devi held one-fourth life estate only in all the properties. We may here itself mention that so far as the identity of the properties are concerned, there is no dispute between the parties.

The Schedule that is appended to the compromise petition dated 15-1-1970 represents all the properties which are the subject-matter of these proceedings. Shri O.P. Vaish contends that under the decree in the Suit No. 136 of 1955 Kishan Devi was granted only life estate in one-fourth share of the properties. Therefore, if at all she could gift, she could convey only her life estate to her sons and nothing more. Firstly, it should be remembered that by the date of the decree dated 21-11-1955, passed by the Sub-Judge, 1st class, Delhi, in Suit No. 136 of 1955, the Hindu Succession Act did not come into force. It came into force only on 17-6-1956. When we brought to the notice of Shri O.P. Vaish the provisions of Section 14 of the Hindu Succession Act, he wanted to argue that inasmuch as the rights of Kishan Devi in the property flowed from the decree dated 21-11-1955, the case should be considered as one governed under Sub-section (2) of Section 14 of the Hindu Succession Act, but not under Sub-section (1) of Section 14.

Section 14 of that Act is as follows : Property of a female Hindu to be her absolute property.-(1) Any property possessed by a female Hindu, whether acquired before or after the commencement of this Act, shall be held by her as full owner thereof and not as a limited owner.

Explanation : In this sub-section, 'property' includes both movable and immovable property acquired by a female Hindu by inheritance or devise, or at a partition, or in lieu of maintenance or arrears of maintenance, or by gift from any person, whether a relative or not, before, at or after her marriage, or by her own skill or exertion, or by purchase or by prescription, or in any other manner whatsoever, and also any such property held by her as stridhana immediately before the commencement of this Act.

(2) Nothing contained in Sub-section (1) shall apply to any property acquired by way of gift or under a will or any other instrument or under a decree or order of a civil court or under an award where the terms of the gift, will or other instrument or the decree, order or award prescribe a restricted estate in such property.

The correct interpretation or relative field of operation of Section 14(1) and (2) gave rise to a spate of litigation and ultimately the correct ambit or the field of operation of Section 14(2) is laid down authoritatively by the Supreme Court in V. Tulasamma v. V. Sesha Reddi AIR 1977 SC 1944. In the head note of the said decision the following is found : ... Sub-section (2) must, therefore, be read in the context of Sub-section (1) so as to leave as large a scope for operation as possible to Sub-section (1) and so read, it must be confined to cases where property is acquired by a female Hindu for the first time as a grant without any pre-existing right, under a gift, will, instrument, decree, order or award, the terms of which prescribe a restricted estate in the property. . . Where, however, property is acquired by a Hindu female at a partition or in lieu of right or maintenance it is in virtue or a pre-existing right and such an acquisition would not be within the scope and ambit of Sub-section (2), even if the instrument, decree, order or award allotting the property prescribes a restricted estate in the property. (pp. 69-70) In view of the above, it may immediately be found that the present is not a case where Kishan Devi acquired all her rights in the properties only under the decree dated 21-11-1955. Even in the award also, it is stated that she has been in possession of the properties, enjoying her rights as a tenant-in-common from the date of death of her husband.

Further Bhagirath Mal died on 29-4-1953. The properties now under consideration are the absolute properties of late Bhagirath Mal. After the death of Bhagirath Mal the provisions of the Hindu Women's Right to the Property Act, 1937, came into operation and it secured a right, equal to that of a son, to Kishan Devi in the properties left behind by her late husband. Further, admittedly Suit No. 136 of 1955 on the file of Sub-Judge, 1st class, Delhi, was a suit for the relief of partition of the joint properties and for allotment of her share. Therefore, we hold that in view of the above cited Supreme Court decision it is the provisions of Sub-section (1) and not Sub-section (2) of Section 14 which comes into operation after the advent of the Hindu Succession Act, 1956. Under the provisions of Section 14(1), the limited rights which Smt. Kishan Devi was enjoying in the properties, on the advent of the Hindu Succession Act, was enlarged into absolute rights. Thereby, even though Kishan Devi was allotted only a life estate under the decree dated 21-11-1955, by virtue of Section 14(1) of the Hindu Succession Act, her rights were enlarged into absolute rights. In this posture of her rights, we are unable to appreciate the contention of Shri O.P. Vaish that the extent of interest of Kishan Devi held in the property, must be determined with reference to Section 14(2) of the Hindu Succession Act.

15. Lastly, it is contended that in any view of the matter, it is not a case where gift-tax is leviable. Shri O.P. Vaish elaborated his argument saying that according to the revenue, the decree in Suit No.376 of 1969 on the file of the Delhi High Court is the document through which Kishan Devi deemed to have transferred her interest in the properties to her sons. However, the document of transfer should be a gift fulfilling the requirements of a valid gift under the Gift-tax Act. One of the essential requirements of a valid gift under Section 123 of the Transfer of Property Act is that it should be registered.

The deemed gift under Section 4 of the Act was included in the definition of 'gift' under Section 2(xii) only from 1-4-1972 and prior to that all the essential requirements of the gift should be fulfilled before a document can be considered to have conveyed the title and in support of this proposition he had relied upon the decision of the Madras High Court in K. Madhavakrishnan v. CGT[1980] 124 ITR 233. In that case the instrument relied upon by the revenue and which was considered to be a gift is a compromise memo filed into Court on 18-4-1966. The assessment year involved in the case was 1967-68. It is no doubt true that in that case it was held that inasmuch as the compromise memo or decree which is the only instrument in writing is not registered it was considered that there was no gift in that year.

However, we may observe that the facts of that case are quite different from the facts on hand. In that case the donor gifted her properties in favour of her daughter even in 1956. The donor was in enjoyment of these properties from 1956 to 1966 and thereafter the donor herself was threatening to obstruct the donee or rather interfering with the enjoyment of the donee, in the gifted properties. The donee filed a suit against the donor and in that suit a memo of compromise was filed by which the donor accepted the full rights of the donee in the properties. The only point decided in that case was that no gift arose for the first time in the assessment year 1967-68 and it was also decided that the compromise memo which was filed into Court does not create any right in favour of the donee, as it was not registered. That means in that case the memo filed into Court was considered only as an acknowledgment of already existing title in favour of the donee, in the gifted properties. However, that is not the case here. We have already seen that the declaration dated 5-9-1969 has no existence in the eye of law. Therefore, the only document on which the revenue wants to rely upon is the compromise decree dated 15-1-1970. This document contains all the terms under which Smt. Kishan Devi relinquished her rights in the property in favour of her sons and grandsons. Therefore, this is a self-contained document from which the rights of the donee flow unlike in the Madras High Court case where only a memo was filed admitting the plaintiff's claim in the suit. Further in the Madras High Court case the suit is for declaration of title and for permanent injunction.

However, in this case the suit itself was filed for partition and separate possession and for rendition of accounts. Now let us see whether a final decree for partition is required to be registered under the Indian Registration Act. As already stated, the judgment of the Delhi High Court regarding the compromise was provided at pages 16 and 17 of the paper book. The last sentence of the judgment is as follows : The parties should put in the requisite stamp paper for the preparation of the final decree within three weeks.

Therefore, it is evident that the requisite stamp was directed to be filed before final decree is embossed thereon. It is not the case of the assessee that such stamp paper was not supplied or a final decree was not prepared on a duly stamped paper and as such it is an inchoate decree under which no rights flow. In the absence of any such argument we take it that the final decree was drafted on a duly stamped paper supplied by the parties. Clause (b) of Section 17(1) of the Registration Act, 1908 is as follows : (b) other non-testamentary instruments which purport or operate to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest, whether vested or contingent, of the value of one hundred rupees and upwards, to or in immovable property ; (vi) any decree or order of a court except a decree or order expressed to be made on a compromise and comprising immovable property other than that which is of the subject-matter of the suit or proceeding ;...

As can be seen from the above, the decree that was passed by the Delhi High Court is a compromise decree and all the immovable properties covered under the compromise are no other than the suit properties.

Therefore, under Section 17(2)(vi), the compromise decree, which is now under our consideration, does not require any registration though it is required to be duly stamped, as per the decision in Dalu Ram v. Ram Krishna ILR 29 (Bom.) 366. Therefore, the argument that because the compromise decree was not duly registered it should not be treated as a valid gift, is devoid of substance and it has to be rejected. Even otherwise, the decision taken by us in this order, is supportable in view of the decision of the Supreme Court in Pushpa Devi's case (supra). In that case the assessment year involved was 1963-64. The second question referred to the High Court in that case was as follows : Whether there was a gift of the appellant's capital investment and her share in the business of Nishat Talkies in favour of the Hindu undivided family In that case also Pushpa Devi made a declaration dated 1-9-1961 seeking to impress her properties with the character of joint family properties. The Supreme Court held that the said declaration dated 1-9-1961 does not bring about blending, "inasmuch" as Pushpa Devi was not a coparcener and so is not entitled to blend her separate properties with that of the coparcenary property. However, while considering the second question quoted above, the Supreme Court felt no difficulty in coming to the conclusion that the said declaration amounted to gift. Their Lordships held as follows : As regards the second question on which this court had called for a supplementary statement, there is no serious controversy that by the declaration dated September 1, 1961, the appellant must be deemed to have made a gift of the items mentioned therein to the undivided family of which she was a member. The Tribunal's finding to that effect must, therefore, be confirmed. The income of the property gifted to the Hindu undivided family will be liable to be brought to tax consistently with this finding and in accordance with law. (p.

739) Therefore, it can be seen that even though the declaration dated 1-9-1961 in that case was not registered yet it was considered to be a deemed gift. When that is so, there is no difficulty to find that the compromise decree dated 15-1-1970 in any event should also be considered to be a deemed gift. Therefore, this ground also should fail.

16. In the result as the assessee is not successful in any of the grounds taken by it, the appeal stands dismissed.


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