1. The assessee has 50 per cent share in the HUF properties, which originally belonged to Shri Surajmal, her husband, who had died on 11-12-1949, leaving behind his widow, the assessee and a son Murlidhar Gattani. She relinquished her interest in the HUF properties by a deed of relinquishment dated 13-3-1968. Accordingly, gift-tax proceedings were started against her, since in the opinion of the ITO, relinquishment of her share amounted to a gift under Section 4(c) of the Gift-tax Act, 1958 ('the Act'). After hearing detailed arguments on behalf of the assessee, the GTO held that there was a chargeable gift-tax under Section 4(c) and brought it to tax.
2. It was urged before the Commissioner (Appeals) that the assessee is not a coparcener of the HUF of Murlidhar Gattani and, therefore, she does not have a right to claim a partition, Her right is limited only to a share, if a partition takes place. Since the partition had not taken place when the relinquishment deed was executed, she had no specific interest in the properties of the HUF, which she could have gifted or transferred. Reliance was placed on the Gujarat High Court ruling in CGT v. Mrs. Taramati Hariprasad Vasa  74 ITR 211 (FB).
The Commissioner (Appeals) rejected this contention. The admitted position was that Surajmal formed a HUF with his son Murlidhar.
Surajmal died in December 1949, therefore, by virtue of the provisions of Section 3(2) of the Hindu Women's Right to Property Act, 1937, the assessee acquired the same interest in the property, which her husband had while he was alive. Sub-section (3) of Section 3 of the said Act, gave the assessee a limited interest known as the Hindu Women's Estate, but she was also given a right to claim partition in the same manner as a coparcener. On the death of Surajmal, his interest devolved on the assessee. The limitation on her right was only in respect of the right of alienation. The said Act was repealed by the Hindu Succession Act, 1956. Section 14 of the Hindu Succession Act lays down that any property possessed by a female Hindu, whether acquired before or after the commencement of the Act shall be held by her, as a full owner and not as a limited owner. Thus, Section 14 of the Hindu Succession Act further enlarged the right and interest of the assessee in the property. The correct legal position, therefore, was that the assessee was the full owner of her 50 per cent share in the properties of the HUF, together with a further right to claim partition as and when she liked.
3. As regards the question whether the assessee was possessed of the interest in the HUF property, when the Hindu Succession Act came into force, the learned Commissioner (Appeals) quoted from page 901 of 14th edition of Mulla's Hindu Law and from the Supreme Court decision in Sukhram v. Gauri Shankar  1 SCR 476 for the proposition that she was possessed of the property on the coming into force of the Hindu Succession Act. The Jearned Commissioner (Appeals) distinguished the Gujarat High Court ruling in the case of Taramati Hariprasad (supra), since in that case there was no widow, but only the karta's wife who had surrendered her interest when her husband was alive. The Commissioner (Appeals), therefore, upheld the assessment to gift-tax.
The assessee is aggrieved and is in appeal.
4. Although, there are five grounds of appeal, the learned counsel for the assessee did not press any other ground except the one which has been discussed above in the order of the Commissioner (Appeals), i.e., the relinquishment of the undivided share of the assessee in the property of the HUF did not amount to a gift and contended that the property left by Surajmal on his death came to the son Murlidhar by survivorship and to his widow, the assessee, by virtue of the Hindu Women's Right to Property Act, but both of them held the property as members of the HUF. The undivided share of the assessee in the said property held by the HUF could not be said to be in her possession, since there had been no partition. The learned counsel for the assessee further contended that since the assessee's share in the property had not been carved out, she was not competent to dispose it of without a partition. The learned counsel distinguished the ruling of the Supreme Court in Sukhram's case (supra) on the ground that the question of possession was not argued before the Supreme Court. He relied on the Gujarat High Court ruling in Taramati Haripasad's case (supra) which was followed in CIT v. Dr. Babubhai Mansukhbhai  108 ITR 417.
Reliance was also placed on CED v. Alladi Kuppuswamy  108 ITR 439 (SC).
5. The learned departmental representative placed reliance on the order of the Commissioner (Appeals) and supported his order.
6. We have considered the rival contentions. The law on the point is quite clear. Under Section 3 of the Hindu Women's Right to Property Act, if a Hindu dies intestate, leaving his separate property, his widow was entitled in the said property to the same share as the sons.
Under Section 3(2) of the said Act, when a Hindu dies having an interest in the HUF property, his widow was to get, subject to Sub-section (3), the same interest in the property as he himself had.
Under Sub-section (3), the interest devolving on a Hindu widow was to be limited interest, known as a 'Hindu Women's Estate', but she had a right to claim partition, as a male owner can. Thus, when the assessee's husband died in 1949, having an interest in the HUF property, that interest devolved on the assessee. The widow's estate was abolished with the coming into force of the Hindu Succession Act and Section 14 of this Act provided that any property possessed by a female Hindu, whether acquired before or after the commencement of this Act, shall be held by her as a full owner thereof and not as a limited owner. Therefore, if it can be held that the assessee was in possession of her half share in the HUF property when the Hindu Succession Act came into force on 17-6-1956, she became the full owner of that half share in the property.
7. The argument, however, is that in the absence of a partition, a member of the HUF cannot claim to be in possession of his share in the property. This argument is totally devoid of any merit, as not only every member of HUF can claim to be in possession of the HUF property, he also has a right of alienation of his undivided interest in the said property. The right of alienation clearly shows that the transferor had not only a title but also possession thereof, though the purchaser of that undivided interest would have to file a suit for partition to get his share demarcated. The Supreme Court decision in Sukhram's case (supra) cited by the learned Commissioner (Appeals) is a clear answer to the contentions urged on behalf of the assessee. In that case, the deceased had died in 1952, leaving a widow, a brother and the brother's son, who constituted the members of the HUF. The right which the widow got in 1956 was the same as the assessee had got in 1949, on the death of her husband, in the property of the HUF. After the Hindu Succession Act came into force, the widow sold half her share in the house belonging to the joint family. Her deceased husband's brother and his son challenged the same, but it was held that the widow having become the full owner of her husband's interest was competent to effect the same. The learned counsel contends that the question of possession was not argued before the Supreme Court in that case. In our opinion, that is totally immaterial, since the widow could only sell her share in the property on the premise that under Section 14(1) of the Hindu Succession Act, she had become the full owner of the property on the coming into force of the Hindu Succession Act, because she was in possession thereof. The facts of that case and in the case before us are, thus, entirely similar, except that in that case she sold the property and in this case she relinquished it. But, in fact, the assessee cannot claim that she had relinquished her interest in the property, though she was not a full owner thereof. Such a position would be entirely contradictory. The two Gujarat High Court decisions, relied on behalf of the assessee, are clearly distinguishable.
8. We are clearly of the opinion that the learned Commissioner was correct in holding that the assessee had become full owner of half the property, even though it was undivided between her and her son, after the coming into force of the Hindu Succession Act, by virtue of Section 14(1) thereof and when she relinquished her interest in the said property, there was a taxable gift and the gift has rightly been brought to tax.