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income-tax Officer Vs. Vinay Bharat Ram - Court Judgment

LegalCrystal Citation
CourtIncome Tax Appellate Tribunal ITAT Delhi
Decided On
Judge
Reported in(1983)3ITD263(Delhi)
Appellantincome-tax Officer
RespondentVinay Bharat Ram
Excerpt:
1. this group of eight appeals concerns the assessments of one individual, viz., vinay bharat ram. the appeals for the assessment years 1971-72 to 1974-75 (both inclusive) are the revenue's appeals.the contention in these appeals is that the aac erred in deleting the following items of income from the assessment of the assessee-individual on the ground that the said income belonged to the huf of which the assessee was a member :________________________________________________date of asstt. income deleted________________________________________________18-9-1975 1971-72 30,836 4,212 2. the remaining four appeals, viz., for the assessment years 1975-76 to 1978-79 are by the assessee. the grievance in these appeals is also common. the objection taken is that the commissioner (appeals) erred.....
Judgment:
1. This group of eight appeals concerns the assessments of one individual, viz., Vinay Bharat Ram. The appeals for the assessment years 1971-72 to 1974-75 (both inclusive) are the revenue's appeals.

The contention in these appeals is that the AAC erred in deleting the following Items of income from the assessment of the assessee-individual on the ground that the said income belonged to the HUF of which the assessee was a member :________________________________________________Date of Asstt.

Income deleted________________________________________________18-9-1975 1971-72 30,836 4,212 2. The remaining four appeals, viz., for the assessment years 1975-76 to 1978-79 are by the assessee. The grievance in these appeals is also common. The objection taken is that the Commissioner (Appeals) erred in upholding the finding of the ITO that the following items of income were rightly assessable in the hands of the assessee-individual for these years and not in the hands of his HUF :____________________________________________________Date of Asstt.

Income assessedorder of year Dividend Refund ofthe annuity depositCommissioner____________________________________________________16-3-1979 1975-76 16,958 4,344 3. The controversy in all these appeals has its genesis in certain gifts made to his grandsons by Sir Shri Ram, a well-known industrialist of Delhi (1884-1963). It would be helpful to notice his family tree here, to the extent relevant. This is extracted from page 5 of the assessee's paper book filed before us :L. Girdhari Lal L. Madan Mohan Lal | |(Adopted) ----------------------------------------- | | | Murli Dhar Bharat Ram Charat Ram | | | ---------- ---------- ------------ | | | | | | | Shri Bansi Vinay Arun Vivek Deepak Siddharth Dhar Kumar Kumar Kumar Kumar Kumar Kumar 4. On 26-12-1944, Sir Shri Ram made the following cash gifts to his six grandsons : It will be noticed that Siddharth Kumar's name does not figure in the above list. This was because Siddharth Kumar was born (to Charat Ram) on 17-1-1945, that is, about a month after the date of the above cash gifts.

5. In July 1945, Sir Shri Ram gifted 2,116 shares in Madan Mohan Lal Shriram & Co. Ltd. (for short 'MMLSR Ltd.') to the following persons :Siddharth Kumar 300 (born on 17-1-1945) -------- 6. Bansi Dhar got married in 1953. A son was born to him in 1956.

Thereafter Bansi Dhar claimed that the dividend income from the above shares of MMLSR Ltd., belonged to 'Lala Bansi Dhar & Sons', his joint family comprising himself, as karta and his son as the other coparcener. This claim was first made for the assessment year 1957-58.

The claim was accepted by the department. This position continued for the assessment years 1958-59 and 1959-60 also. However, Bansi Dhar took up a different stand from the assessment year 1960-61 onwards. He now claimed that the said shares had come to him in his individual capacity by way of gift from Sir Shri Ram. Hence, they were not the property of his joint family, but his individual property. The department did not accept this new claim. The dispute reached the Tribunal, the assessment years involved being 1960-61 and 1962-63.

7. The above two appeals filed by Lala Bansi Dhar & Sons, the HUF [IT Appeal Nos. 18332 of 1967-68 and 5325 of 1978-79] were decided by a Division Bench of the Tribunal on 3-10-1970. This Bench rejected the contentions of the HUF. It held that though it could be said that the shares were received by Bansi Dhar in 1945 in his individual capacity, following his marriage and later the birth of a son in 1956, the gifted shares acquired the character of ancestral property. In reaching this conclusion, the Tribunal took into account, inter alia, a letter written by Sir Shri Ram to the Board of Directors of MMLSR Ltd. on 5-7-1945. This letter was in the following terms : I want to make an irrevocable gift of 21 per cent of my shares in Madan Mohan Lall Shri Ram & Co. Ltd., to my grandsons as under :Bansi Dhar son of Lala Murli Dhar 308 sharesGaja Dhar son of Lala Murli Dhar 308 sharesVinay Kumar son of Lala Bharat Ram 300 sharesArun Kumar son of Lala Bharat Ram 300 sharesVivek Kumar son of Lala Bharat Ram 300 sharesDeepak Kumar son of Lala Charat Ram 300 sharesSiddharth Kumar son of Lala Charat Ram 300 shares ------------- I hope you will kindly approve of the proposed transfers and register the same in your books.

In determining the effect of the above Setter, the Tribunal also considered the implications of the cash gifts made by Sir Shri Ram in 1944 to his six grandsons (see paragraph 4 above).

8. When the same dispute came up for the assessment year 1961-62 before the Tribunal [IT Appeal No. 874 (Delhi) of 1973-74] Lala Bansi Dhar & Sons asked for a reconsideration of the above decision of the Division Bench. A Special Bench, was, therefore, constituted to go into the question again. The Special Bench disposed of this appeal on 28-9-1976.

It held that the impugned shares were received by Bansi Dhar as donee in his individual capacity and there was no subsequent blending of this property with the joint family property. It thus differed from the view taken by the Division Bench for the assessment years 1960-61 and 1962-63 on this issue. It directed that the income from those shares be excluded from the assessment of Lala Bansi Dhar & Sons, HUF.9. In reaching the above conclusion the Special Bench too interpreted the letter dated 5-7-1945 of Sir Shri Ram to the Board of Directors of MMLSR Ltd. It also took into account the implications of the cash gifts to the six grandsons from Sir Shri Ram. Here, however, the Special Bench fell into an error. It proceeded on the basis that these cash gifts had been made in 1964. This error came about because the Division Bench in its order of 3-10-1970 had referred to the date of the cash gifts as 26-9-1964 instead of 26-12-1944 the correct date-apparently an error of typing. The Special Bench proceeded on the basis that Sir Shri Ram had made the gifts in 1964 and on this impression, analysed the position as under : It does not also stand to reason that he would take 19 years to embark upon the second leg of the scheme. There is no explanation, much less any convincing one, for this delay. These cash gifts made in 1964 relied upon strongly by the earlier Bench to justify the conclusion that late Shri Ram had an intention of effecting a family arrangement, appear to us to be more consistent with the argument advanced by Shri G.C. Sharma that it was due to the philanthropic attitude of late Shri Ram that these gifts were made. At the time these gifts were made, there were gifts made to several other institutions as also to other members of his family. This appears, therefore, more consistent with two separate unconnected transactions of gifts rather than with a theory that there was an intention of effecting a family arrangement in 1945. This matter can be looked at from another angle. Even if the cash gifts made in 1964, taken together with other gifts made thereabout, are of such amounts as to indicate an intention to effect a family arrangement, then it would be the intention only at that time having its genesis at about that time. There is nothing to connect this supposed intention with a similar intention in 1945, 19 years back. In order that it can be said that there is a scheme of effecting a family arrangement and the gifts of shares in 1945 and the gifts of cash in 1964 are two parts of an integrated transaction, there ought to be material to connect the two. This evidence is totally lacking.

It was thus apparent that the Special Bench in recording the conclusion, had relied partly (unwittingly, of course) upon incorrect assumptions.

10. In the appeal of the assessee-individual here, viz., Vinay Bharat Ram, the same question has to be decided, i.e., whether the gifted assets came to the assessee as an individual or not. Because of the conflicting decisions of the Division Bench (order dated 3-10-1970) and the Special Bench (order dated 28-9-1976) on this question, a Special Bench was constituted for hearing the instant appeals. This is how these appeals have come up before us.

11. A necessary prefatory exercise is to take a close look at the ratio decidendi of the two discordant orders of the Tribunal. We look at the Division Bench first. Its reasoning for the assessment years 1960-61 and 1962 63 was briefly as under : 1. Conduct of the assessee (Lala Bansi Dhar & Sons, HUF) showed that the 308 shares of MMLSR Ltd., received by Bansi Dhar from his grandfather were treated as HUF property, at least after the birth of a son, in 1956, to Bansi Dhar. Bansi Dhar disclosed the income from these shares in the returns of his HUF and also wrote to the ITO on 21-3-1957. The letter stated that on the birth of his son the shares became the property of his HUF comprising himself and his son, he being the karta.

2. Even assuming (for argument) the shares had belonged to Bansi Dhar, individual, 'by filing the returns of income for various years he blended his personal property with the family assets'. This happened in 1956 and there was no subsequent partition in his HUF. Hence the shares remained joint from 1956.

3. Apart from the gift of shares in July 1945, Sir Shri Ram made cash gifts also to six of his seven grandsons on '26-9-1964'. (The date '26-9-1964' was very obviously a typing error. This is evident from the Division Bench making the following endorsement concerning this date.

The Division Bench was therefore fully aware that the cash gifts had preceded the share gifts.) 4. When the two gifts (cash and shares) were considered together it was evident that what Sir Shri Ram did was to effect a family arrangement or a partition of his assets 'under a clock' in his lifetime. 'Naturally' such partition would be with reference to his grandsons and not sons. That was why each grandson got more or less the same number of shares. Any 'inequality' therein was set right by the pattern of the cash gifts.

5. What was the intention of the donor/testator This was the primary question. This had to be seen from the deed/will. In the absence of clear words, such intention had to be found from the language of the document and the surrounding circumstances. Did the grantor really want to make a gift of property Or was the apparent gift only an integral part of a scheme for partition of the property There is no presumption that the donor intended the one or the other-See C.N. Arunachala Mudaliar v. C.A. Muruganatha Mudaliar [1954] 5 SCR 243.

6. Mayne (Hindu Law, 11th Edn., pp. 547-548) also refers to division of property 'by a grandfather among his grandsons'. The ratio of Arunachala Mudaliar's case (supra) would be applicable to such a division also.

7. It was clear, on the evidence on record (including Sir Shri Ram's letter of July 1945 to MMLSR Ltd.), that the donor intended to effect a partition or a family arrangement, i.e., Bansi Dhar received the shares in 1945 initially in his individual capacity.

'But with his marriage and the birth of a son later in 1956, these shares acquired the character of ancestral property.' 8. In any case the shares could not be the self-acquired property of Bansi Dhar. It was unnecessary to decide whether they were other than ancestral property between 1945 and 1956. With the birth of a son in 1956, certainly, the shares became ancestral property. The dividend income therefrom was rightly assessable (for the assessment years 1960-61 and 1962-63) in the hands of Lala Bansi Dhar & Sons, HUF.12. The Special Bench's order may be seen now. The appellant here was of course Lala Bansi Dhar & Sons, HUF again. The assessment year was 1961-62. The Special Bench took a different view, for the following reasons briefly : 1. Gift of a few shares made by grandfather to his grandsons could not be said to be intended for the benefit of their families or by way of partition or family arrangement.

2. Sir Shri Ram's letter of July 5, 1945 was the sole documentary evidence relied upon by the Division Bench. That did not support the conclusion recorded by that Bench. In 1945 his sons 'were all united' and the letter could not be read as exposing the donor's intention to effect a partition amongst his grandsons. The letter indicated 'that the gift was intended absolutely for the benefit of the grandsons individually of whom Lala Bansi Dhar was one'. There was nothing in the document to suggest that the gift was limited in any way.

3. There was no question (in 1945) of the donor intending the gifts for the grandsons as the heads of their respective families. None of them was married at that time. They were all minors.

4. Returns were no doubt filed by Lala Bansi Dhar & Sons, HUF, for the assessment years 1957-58 to 1960-61 showing the income from the shares. But this was 'much later'. It was not a relevant fact to judge the donor's intention in 1945.

5. Filing returns (as in this case) could (if at all) be merely evidence of blending of separate property with family property. But then the intention to treat separate property as that of the joint family must be unequivocal. It must be declared on a clear appreciation and realisation that the property rightly belongs to the individual but that he wishes to give up his sole rights therein. If the intention was not expressed unequivocally, the separate property in question could not be said to be impressed with the character of joint family property-Venkata Reddy v. Lakshmanna AIR 1963 SC 1601.

6. The facts of the case showed that Lala Bansi Dhar did not say that 'these shares had been blending with the character of joint family property'. On the contrary, he 'had been thinking that the property belongs to the family'. Hence it was difficult to hold that the shares had been impressed with the character of joint family property as held by the Division Bench.

7. In any case, if the revenue claimed that there had been blending, it implied that Lala Bansi Dhar had received the shares in 1945 as 'individual'. The gift of shares was not to the HUFs of the donees.

Nor were the shares 'having been received individually impressed with the character of HUF property'.

8. The Division Bench made a serious error in viewing the cash gifts of 1964 and the share gifts of 1945 as integral parts of a scheme of family arrangement. The cash gifts of 1964 and the share gifts of 1945 were two separate unconnected transactions. [Here, the Special Bench failed to notice the endorsement of the Division Bench reproduced in para 11(3) (supra). Hence much of its criticism of the Division Bench's reasoning on this aspect is of merely historical interest.] 9. In view of the above position there was no need to examine 'whether a grandfather has any right to effect a partition between his grandsons'.

10. Income from the shares had to be excluded from the assessment of the HUF, i.e., it was the income of the individual, Bansi Dhar.

13. Shri S.D. Kapila, appearing for the revenue, opened the arguments on appeals for the assessment years 1971-72 to 1975-76. He made out the same case, of course, for the assessment years 1975-76 to 1978-79 as well. The assessee is the appellant there. Shri Kapila highlighted the following aspects : 1. There is no independent evidence at all here for the assessee's claim that the shares were joint family property. The assessee had never thought of them as such. His only reason for the claim was : the Division Bench by its order of 3-10-1970 had held similar shares to be that of the HUF of his brother, viz., Lala Bansi Dhar & Sons.

This was no reason at all in the light of the position in Hindu law as explained in Venkata Reddy's case (supra) and noticed also by the Special Bench.

2. There was (by and large) no inconsistency on the part of the revenue in its approach to this issue-an issue common to six other taxpayers also of this group. Only in the cases of Lala Bansi Dhar and Lala Shri Dhar the department had sought to assess the dividend income from the gifted shares as the income of the respective joint families. But in the other five cases its stand was that it was separate property.

3. There was a disruption of the joint family of Sir Shri Ram in 1932. His sons were thereupon divided from him. There was no reunion thereafter. The assets held by Sir Shri Ram were held as his absolute property from thereon. Hence, there was no question of a partition or even a family arrangement qua the grandsons (the assessee here is one of them) in 1944 or 1945. Such a claim was a total negation of the facts on record.

4. The use of the expression 'under the cloak of a gift' in paragraph 13 of the Division Bench's order was singularly unhappy.

There was, quite simply, no need of any 'cloak' in 1945 for passing off gifts as part of a family arrangement. There was no gift-tax and even the income-tax rates were most bland. There was no need for any tax subterfuges then. Exploitation of the incidents of Hindu law for tax advantages came to be evident much later. The Division Bench misdirected itself in investing the simple gifts of 1944-45 with such sinister undertones.

5. Sir Shri Ram was a hard-headed man of business. He could speak plainly. His yea was yea and his nay was nay. The letter of 5-7-1945 was all of a piece with this quality of the man. It was in simple terms. It recorded plainly what Sir Shri Ram intended-an 'irrevocable gift of 2,116 of my shares in MMLSR Ltd., to my grandsons'. Followed by a list of individuals, the donees and the number of shares (proposed gift) marked against each name. To read into this simple statement, nuances of a different intent or subtle, hidden meaning was, under no canon of construction, permissible.

Shri Kapila, therefore, urged that the revenue's appeals be allowed and the assessee's appeals dismissed.

14. Shri O.P. Vaish, the learned counsel for the assessee, contra, saw a larger purpose behind the seemingly simple letter of 5-7-1945. He did not question the ability of Sir Shri Ram to speak plainly. He would, however, rely on the factual hinterland as well as the (relevant) acts of the donor at the material time to show what he really intended. Shri Vaish referred us first to the manner in which MMLSR Ltd. was formed.

15. At page 52 of the assessee's paper book is a copy of the memorandum and articles of association of the said company. (The company was incorporated on 11-5-1932.) The following features were emphasized in this regard : a. To acquire all the movable property of the Joint Hindu Family of L. Madan Mohan Lall and L. Shri Ram and their children Vaish Aggarwala of Kucha Maidas (a list of the same is attached) and to pay the value thereof in fully paid up shares to the various members of the said family.

b. Article 4 of the articles of association authorised a shareholder to gift or will away his shares in the company to any of his male, lineal descendants or such other persons as are members of the company on the date of such disposition. Article 6 prescribed that violation of any of the articles (as also embracing/marrying a non-Hindu woman) would result in the offending shareholder being deemed to have died immediately 'before the Act'. Thereupon the shares standing in his name were to 'become the property of and be transferred to the name of the person who according to these articles should succeed to him'. Article 7 laid down that succession to the shares of a deceased shareholder 'shall be in accordance with Hindu (Mitakshara) Law' subject to the conditions specified in the article itself. Daughters or widows who so succeeded were given only a life-interest in the income. The shares could not be alienated by them. The reversion was to the heirs of the last deceased male holder eligible to succeed under the article. There were restrictions on adoption also under this article.

16. The point stressed by Shri Vaish was that the company was not just the result of a purely business decision taken by independent incorporation, unconnected by family ties. It was a group effort by two branches of the same family with a strong sense of family ties. The two branches (L. Madan Mohan Lall's and L. Shri Ram's) pooled their resources and set up the company. The memorandum and articles were so framed as to stress and preserve the cohesiveness of this family group.

Sir Shri Ram, fully alive to this special primary object of incorporation, always acted to further such a purpose. The gift of shares (and of cash) he made to his grandsons could not be torn out of this vital context. His letter of 5-7-1945 could not, therefore, be read simply as a latter from a man dictating a purely business arrangement. It had to be read as of a man of strong family loyalties acting in tune with his cherished expectations. Reading the letter of July 1945, baldly, de hors the factual context and unmindful of the sentiment that coloured the donor's thinking so deeply, was not valid.

In other words, what the letter signified was not an isolated gift of shares to each of the grandsons but a family arrangement, if not a partition. What was material was the donor's intention and not what the donees said or did either before the revenue authorities or elsewhere.

17. Shri Vaish then referred to the cash gifts. This had to be read with the share gifts. The two gifts were made within a period of one year. The Division Bench's approach (order of 3-10-1970) was correct.

It had looked at the two transactions as parts of a whole, Shri Vaish referred to pages 1 and 2 (as also pp. 8-11) of the paper book. Here details of the original allotment of shares in MMLSR Ltd. (as well as subsequent dispositions of shares/cash flowing from Sir Shri Ram to his sons and grandsons, as also gifts to various institutions) are given.

From this Shri Vaish submitted that the whole exercise of Sir Shri Ram had been (including the impugned gift of shares) to effect the dispositions in step with family obligations and equitably. The gift of shares could not, therefore, represent an isolated act by which Sir Shri Ram wanted to benefit his grandsons individually.

18. Shri Vaish also contested the claim for the revenue that Sir Shri Ram had become divided from his sons in 1932 itself. Even assuming there had been such a partition (he argued) what had come to Sir Shri Ram as his share was joint family property and it was this joint family property (cash and shares) that came to the grandsons. The presumption was : the shares were joint family property in the hands of the grandsons also. Shri Vaish referred in this connection to various authorities, which according to him supported his stand.

19. Shri Vaish's complaint was that the revenue had been most inconsistent in the matter. It was the revenue's stand that the shares were joint family property, on the same facts, in the case of Lala Bansi Dhar & Sons (HUF). Then why not accept the assessee's claim here In fact, Lala Bansi Dhar & Sons (HUF) conceded the revenue's claim in its assessment for the assessment year 1978-79 and accepted the assessment of the dividend income from the gifted shares in its assessment. The other assessee of this group -Lala Shri Dhar & Sons (HUF)-also did likewise and was assessed on the dividend income from the gifted shares for the assessment year 1978-79 (at pp. 17-20 of the paper book the relevant assessment orders are available).

20. Coming to the facts of the case before us, Shri Vaish pointed out that a son was born to the assessee in 1965. The relevant assessment year was 1966-67. The assessee however returned the dividend income from the said shares as his individual income. The Division Bench's order of 3-10-1970 (Lala Bansi Dhar & Sons, HUF) then came to the assessee's notice. He, therefore, by a revised return, claimed that the disputed income was that of his HUF, for and from the assessment year 1970-72. In conclusion, Shri Vaish submitted that what the assessee really wanted was that the revenue should make up their mind on this issue and act consistently thereafter in all the connected cases.

21. We think that the Division Bench touched the heart of the controversy when it said, what mattered was the intention of the donor at the time of the gifts. We also find that we are in respectful agreement with its reading of Arunachala's case (supra) ; and the principles settled therein. We must, however, part company with the Division Bench in its reliance on Mayne's Commentary. We have seen the passage referred to (11th edn., pp. 547-548). Articles 446 and 446A are relevant. Article 446 says that a father has power to effect a division not only between himself and sons but also between the sons inter se.

It adds : So also it would seem that he has the power to make a division when the sons are dead and his grandsons alone are living.

22. Now that was not the situation here. The sons of Sir Shri Ram were living at the time of the gifts and the grandfather had no power to effect a partition/arrangement involving only his grandsons and himself. Article 446A of the Commentary carries the heading 'Limitations on grandfather's power' and reads as under : 446A. There is one important distinction between the father's and grandfather's powers in this respect. The father is the lawful guardian of his son but the grandfather is not the lawful guardian of his grandsons unless he is so appointed by an order of courts. If the joint family consisted of himself and his grandsons, the grandfather would be entitled in law to take a half and leave the other half to the grandsons ; but this does not mean that when a joint family consists of a father, a son and the sons of a deceased son, he can divide the third share which would have fallen to his deceased son had he lived, among that son's sons. The grandfather has no authority to say that the properties allotted to that son's branch should be divided in a particular way amongst the members of that branch. In such a case the grandsons as between themselves continue undivided and they would take the properties allotted to them jointly.

We do not see anything in the above passage in support of the view taken by the Division Bench that the gift of the shares represented a partition of joint family property effected by a grandfather, in accordance with the principles of the Hindu Mitakshara law. There is even less room for the claim that the gifts represented a 'family arrangement'.

23. We have looked at the object clauses of the memorandum and articles of association referred to by Shri Vaish. No doubt there is a desire to keep intact the family ties and bonds of kinship and (if we may add) the family capital too. But it is difficult to see this as the leitmotif of Sir Shri Ram's life and philosophy. We do not see it in forming every word and deed of his, regardless of what the context said. Shri Kapila says, the donor here was a man of plain speech and clear thinking ; he did see to it that the various restrictions on the holding and transfer of shares were put down in clear terms in the memorandum and articles supra ; and nothing prevented him from telling the persons involved that the shares were not for the exclusive benefit of the individual donees, but for their families yet to come. We think Shri Kapila does have a point here.

24. The donees were very young in 1944-45. In fact one of the grandsons was born after the cash gifts of 26-12-1944. Shri Kapila points out that it would be very close to absurd to believe that Sir Shri Ram made the share gifts to these children to have and to hold for their 'families'. We find it difficult to disagree with this reading of the situation. We have also carefully read the letter of 5-7-1945. We do not think it requires to be read between the lines. We do not find in it shades of some inner meaning, cleverly concealed. It seems to be a plain letter stating a simple wish of the donor to gift irrevocably a specified number of shares to each of his seven grandsons.

25. Even on the point of blending, the assessee's case is not strong.

We have already referred to Venkata Reddy's case (supra). This decision was noticed by the Special Bench in Lala Bansi Dhar & Sons (HUF's) appeal [see para 12(6)]. There has been no unequivocal declaration here of the intention of the owner-coparcener to waive his separate rights in the property, of abandoning all separate claim upon it. This has to be done on a clear appreciation and realisation that 'the property rightly belongs to the individual but that he wished to give up his sole rights therein'. The case for the assessee is however like this.

The assessee comes to hear of the decision of the Division Bench of 3-10-1970 ; and thereupon he thinks the shares should be really the property of his HUF and not his, as he had believed all along ; and, therefore, discloses the dividend income from the shares in question in the return of the HUF (revised return filed on 21-12-1972) for the assessment year 1971-72 and onwards. This is all that has happened. We are in respectful agreement with the Special Bench (order of 28-9-1976) when it says that in such cases the property in question could not be said to be impressed with the character of joint family property.

26. It only remains to tie up a few loose ends. Shri Vaish said there had been no partition in 1932 between Sir Shri Ram and his sons. He also stated that even assuming there had been such a partition, the dividend income from the shares of MMLSR Ltd. had all along been assessed as the income of the respective joint families of the three sons of Sir Shri Ram. But about the assessment of Sir Shri Ram himself, Shri Vaish had no information. The point made was that the shares in question were joint family property in the hands of Sir Shri Ram in 1945 when he gifted them and hence the gifts represented, if not a partition, at least a family arrangement. Firstly, we have the direct evidence of the letter of 5-7-1945 to understand what the donor intended in the matter. There is no talk of any family arrangement there. There is also no reference to the shares being the property of the joint family of the donor and his sons or of the shares being joint family property in his hands as a divided coparcener. Secondly, there is no record of any assessment at all of such a bigger family (of Sir Shri Ram and his sons) on the dividend income from such shares.

Thirdly, if such a bigger family had been a tax unit in 1945, it is not shown when it was disrupted and whether any order under Section 25A/171 of the Income-tax Act, 1961 ('the Act') came to be passed. Lastly, as admitted by Shri Vaish, there is no evidence that Sir Shri Ram ever claimed in his personal income-tax assessments that the dividend income from the said shares was not his individual income.

27. Shri Vaish had also referred to a number of other gifts made by Sir Shri Ram to his relatives and various institutions (pp. 1-2 and 8-11 of the paper book). The position regarding gifts to relatives may be seen here. The first gift of (shares of MMLSR Ltd.) by Sir Shri Ram was in 1932, to his two sons and to two grandsons by his third son. The next gift is of cash to his six grandsons in 1944 noticed (supra), i.e. 12 years later. Then comes the gift of July 1945-shares of MMLSR Ltd. to his seven grandsons. Thereafter there are gifts to various members of his family in 1950, 1953, 1959, I960, 1961 and 1962, all being cash gifts. The cash gifted comprised modest amounts, in the context of the wealth of Sir Shri Ram and we do not see any grand design behind all these dispositions as Shri Vaish wants us to. In fact (we find) an exactly opposite argument was pressed upon the Special Bench for acceptance, by the learned counsel for Lala Bansi Dhar & Sons, HUF (see para 5 of the order dated 28-9-1976). The argument there was : the gifts stemmed from Sir Shri Ram's 'general munificent attitude of benefiting others by making gifts'. It is not easy, therefore, to see any 'partition' or family arrangement in the gifts of the shares to the seven grandsons in 1945. These gifts stand on their own, as simple gifts to the donees as individuals.

28. Shri Vaish had also referred to some authorities. One of them-CIT v. Gurpreet Singh [1981] 6 Taxman 141 (Delhi)-is clearly distinguishable on facts as indeed pointed out by the departmental representative. The other decisions in CWT v. Harshadlal Manilal [1974] 97 ITR 86 (Guj.) and Prem Kumar v. CIT [1980] 121 ITR 347 (All.) are not of any direct assistance. The facts as well as the issues involved were different there. In neither of these decisions was any transmission of property by gift involved. The crucial question here is : what did the donor intend when he made the impugned gifts in 1945 We have already considered this aspect and recorded our conclusion also on this point, in the light of the ruling in Arunachald's case (supra).

29. Shri Vaish asks for consistency, in the last resort. He wants the revenue not to dither but to make up their mind on what Sir Shri Ram intended when he gifted the shares. And once they have done that, to follow that decision in all the cognate cases, uniformly. In principle, this is unexceptionable ; and Shri Vaish wants us to direct the revenue accordingly. But so far as the issue in this case is concerned, we must confess we are not inclined to throw stones. We shall leave it at that.

30. In the result, we find ourselves in respectful agreement with the conclusion of the Special Bench, recorded in its order of 28-9-1976, on the nature of the gifts of shares made in July 1945 by Sir Shri Ram.

The gifts reached the donees as individuals. We would, therefore, allow the appeals of the revenue (for the assessment years 1971-72 to 1974-75) and dismiss the appeals of the assessee for the assessment years 1975-76 to 1978-79.


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