1. This is a departmental appeal against the order of the AAC, Visakhapatnam, dated 23-2-1982, whereby the AAC allowed the appeal in full and cancelled the gift-tax assessment made by the GTO under his assessment orders dated 31-3-1979. The facts leading to the present appeal are as follows : 2. S/Shri Ramalingaraju, Padmaraju, Laxminarasimharaju, Bheemaraju, Sahdeva Satyanarayanaraju, Raghurama Krishnamraju, Janakiramaraju and Vishwanadharaju are brothers and are members of erstwhile HUF holding ancestral agricultural lands and other properties. In 1952 partition took place in this family and each of the brothers got agricultural lands and other properties towards his due share. The last of the brothers Vishwanadharaju married Smt. Chandravathi in 1952. Shri Vishwanadha-raju made a settlement of agricultural lands, measuring 39.96 acres of the value of Rs. 6,000 in favour of his wife Smt.
Chandravathi, under a document dated 2-4-1955. Smt. Chandravathi had four sons through her husband. Their names along with dates of birth are given below : From the above it can be seen that on the date of the settlement dated 2-4-1955 the first of the sons R. Venkataramaraju should have been conceived and so we should consider him as a person already conceived in the womb of his mother. Under the terms of the settlement deed executed in favour of Smt. Chandravathi she is to enjoy the usufruct from agricultural lands for her life. She does not have any powers of alienation. After her death the property should pass on to her progeny.
Smt. Chandravathi in her turn enjoyed the property and executed a settlement deed dated 31-5-1970. Copy of the document is provided at pages 3 to 5 of the paper compilation filed before us. The settlees under the said deed are Padmaramalingaraju, Satya Sai Ramakrishnamraju and Venkatanarayana Srinivasaraju. it may be mentioned that the eldest son Venkataramaraju was given away in adoption and thus went out of the family in 1971. Therefore, the settlement was made in favour of the remaining three sons by Smt. Chandravathi. In the said settlement deed an extent of 30.61 acres, which formed part of lands settled on her by her husband under the deed dated 2-4-1955, were conveyed to her three sons. Further, the recitals of the settlement deed revealed that the settlor assessee described herself as the absolute owner of the said property. The source of her title to the property settled was not mentioned in the recitals of the deed. In the gift-tax return filed for the assessment year 1971-72, the value of the gift was returned at Rs. 1,22,000. The GTO did not accept the returned value of the gift but enhanced its value to Rs. 1,65,000 and gift-tax was levied thereon under the assessment orders dated 3-4-1974, copy of which was furnished at pages 6 and 7 of the paper compilation filed before us.
3. An appeal was taken up before the AAC against the assessment finalised by the GTO. An additional ground was filed before the AAC raising the plea that the settlement deed dated 31-5-1970 was void ab initio since the assessee has no power of disposition over the subject-matter of the settlement deed. This ground was rejected by the AAC stating that this was a new point not put before the GTO or in the original grounds preferred before him. However, the AAC reduced the value of the gift by Rs. 9,940 and modified the assessment order framed by the GTO. Copy of the AAC's order dated 9-1-1975 is furnished at pages 8 and 9 of the paper compilation before us.
4. Further aggrieved the assessee came up in appeal before this Tribunal and it is sought to be contended that the AAC was wrong in not dealing with the additional ground filed before him and in rejecting to consider the said ground. This Tribunal held in its orders, in GT Appeal No. 3 (Hyd.) of 1975-76 dated 30-4-1976 that the AAC was not justified in not entertaining the additional ground raised before him inasmuch as the question raised goes to the very root of the assessment made by the GTO. Therefore, they allowed the appeal and restored the matter to the file of the GTO with a direction to examine the claim of the assessee regarding her power of disposition of property said to have been gifted during the year of account and make a fresh assessment in accordance with law. Copy of the order of the Bench 'A' of this Tribunal is provided at pages 10 and 11 of the paper compilation filed before us.
5. After the matter was remanded, the GTO took up the matter again for enquiry. It is contended before the GTO that the settlement deed dated 31-5-1970 is a void document inasmuch as the original settlement deed under which the settlor herself got the property, viz., the deed dated 2-4-1955 itself is void ab initio. Shri Vishwanadharaju, the settlor under document dated 2-4-1955, has no authority to make any settlement in favour of his wife regarding his ancestral immovable properties inasmuch as by the date of that settlement a son was already conceived and he is in the womb of his mother by then. A son conceived is as much as a son born and if he was born alive subsequenly, he would get a right by birth and the right of his father as a sole surviving coparcener cannot be exercised after the date of conception of a son.
That means by 2-4-1955 Sri Vishwanadharaju was no longer a sole surviving coparcener and, therefore, the gift of ancestral immovable properties made by him in favour of his wife is clearly voidable.
Further, it is sought to be argued that assuming, without admitting the settlement deed dated 2-4-1955 was valid, the right given to Smt.
Chandravathi was only a life estate and no powers of alienation were conferred on her. So she cannot exercise any better right than the rights conferred on her under the deed. However, under the deed dated 31-5-1970 she purported to convey absolute estate in favour of her three sons which she is incompetent to do. Therefore, firstly the gift was void as the settlor herself did not get any rights under the document dated 2-4-1955 and, alternatively, she cannot convey absolute rights in the gifted properties as she had no such rights herself. The GTO did not accept these arguments. He held that in the gift-deed the donor guaranteed the delivery of the gifted property and also its continuous ownership and enjoyment in the hands of the donees in case there will be rival claims. She also undertook that she would bear all expenditure to clear the title and to see that the gift is made valid and unassailable in the hands of the the donees and for that purpose she gave guarantee to meet the litigation expenses from out of her movable and immovable properties. Therefore, the GTO felt that the donees can certainly sue her for fulfilling her guarantee in case there arises any legal implications in future. He did not decide as to whether the assessee-donor derived any rights and if so to what extent under the terms of the deed dated 2-4-1955. The GTO computed the total value of the gift at Rs. 1,48,050 treating the assessee-donor as absolute owner of the gifted land.
6. Aggrieved by the revised assessment thus framed against the assessee she went up in appeal before the AAC, Visakhapatnam. The same arguments which were advanced before the GTO were repeated before the AAC. In support of her contentions the assessee relied upon the decision of the Supreme Court in Ammathayee alias Perumalakkal v. Kumaresan alias Balakrishnan AIR 1967 SC 569 and the judgment of the Madras High Court in CGT v. R.M.D.M. Ranganathan Chettiar  133 ITR 890 wherein it was held that the gift of ancestral immovable properties by the karta to the members of the family was void. In the Supreme Court's case cited above, it was laid down that the gift made to a wife by her husband of ancestral immovable property out of affection cannot be upheld as no such gift is permitted under Hindu law insofar as immovable ancestral property is concerned. Acting upon the ratio of the two decisions mentioned above, the AAC cancelled the gift-tax assessment on the ground that the gift obtained by the donor in 1955 itself is void in law. Therefore, he allowed the appeal and cancelled the gift-tax assessment itself.
7. Aggrieved by the impugned order passed by the AAC, the matter was brought in second appeal before this Tribunal and thus the matter stands for our consideration. On behalf of the revenue it is sought to be contended : 1. The settlement in favour of the donor-assessee in this case obtained from her husband in 1955, was quite valid in law.
2. By the date of settlement dated 2-4-1955, the assessee's husband should have been taken as the sole surviving coparcener and hence got absolute rights to gift away any ancestral immovable properties in his hands.
3. The rights of an unborn son are not absolute. The doctrine that under the Hindu law a son conceived or in his mother's womb is equal in many respects to a son actually in existence in the matter of inheritance, partition, survivorship is not one of universal application and this doctrine especially does not fit in with the scheme of the Gift-tax Act as it was not the intention of the Legislature to incorporate this special doctrine into the Gift-tax Act.
4. After the properties were setlled on the assessee in 1955, she was in exclusive and beneficial enjoyment of those properties to the exclusion of others and hence as her enjoyment continued nec vi neclam and necprecario for more than 12 years from the date of settlement she got valid title by prescription and adverse possession and so by the date the impugned gift dated 31-5-1970 she would become the absolute owner of the gifted properties and thus she would be deemed to have conveyed full valid title to the donees in this case. Thus the taxing of the gift in the revised assessment by the GTO is quite valid and unassailable. Therefore, it was argued that the revised assessment of the GTO is worthy to be restored and the impugned order of the AAC is liable to be set aside.
On the other hand, it is sought to be contended on behalf of the assessee that the impugned orders of the AAC are quite valid and in consonance with the law on the subject as well as in accordance with the facts on record. Admittedly, by 3-4-1955 the first of the sons, viz., Venkataramaraju was already conceived and he was in his mother's womb. As soon as he is conceived his right of interdiction relates back to his date of conception when once he is born alive. Admittedly, the property possessed by Shri Vishwanadharaju, husband of the assessee, is the property which fell to his share on partition with his brothers and, therefore, should be considered as ancestral immovable properties in his hands. In those properties his son, Shri Venkataramaraju, acquired right by birth and so the gift dated 2-4-1955 is not valid as it was executed disregarding the rights acquired by Shri Venkataramaraju, the unborn son at that time, in the coparcenary property. Under the terms of the settlement deed dated 2-4-1955, the assessee was given only life interest in 39.96 acres of agricultural lands. Having come to possess the land under the terms of the deed, she cannot enjoy more rights than what were conferred on her under the terms of the deed. She cannot convey better rights than what she had.
However under the impugned gift dated 31-5-1970 she purported to have gifted her absolute rights in the gifted lands, which she does not possess. Therefore, at any rate the gift should not be taken to have conveyed absolute rights. It is also argued that so long as her sons remain as minors the assessee cannot prescribe any right of adverse possession against them. Further she entered into possession under the terms of the gift dated 2-4-1955. There is no evidence in this case as to from which date she abandoned her rights under the deed and from which date she began prescribing her so called absolute rights in the gifted properties.
8. We have considered these arguments in depth and with reference to the facts and documents on record. We are inclined to agree with the arguments advanced on behalf of the assessee for the reasons set out hereafter. Firstly, the question that falls for consideration would be whether the gift made under deed dated 2-4-1955 is a valid gift or not.
That gift was executed by Shri Vishwanadharaju in favour of Smt.
Chandravathi, the assessee herein. We have already mentioned that their first born son, viz., Venkatararamaraju, was born on 30-7-1955 within four months after the date of gift. Therefore, we are reasonable to presume that by the date of gift Shri Venkataramaraju, who was later on given away in adoption in 1971, was already conceived in his mother's womb and, therefore, Shri Vishwanadharaju cannot be considered as sole surviving coparcener with regard to ancestral immovable properties in his hands. Admittedly, what Sri Vishwanadharaju obtained on partition in 1952 along with his brothers partake the character of ancestral immovable properties with regard to his after born sons. Now the question is whether Shri Vishwanadharaju can make a valid gift of not an inconsiderable extent of 39.96 acres of agricultural lands in favour of his wife. The rights of an after born son under Hindu law were summarised in AIR 1964 SC 510 it is held as follows : The sole surviving member of a coparcenary has an absolute power to alienate the family property, as at the time of alienation there is no other member who has joint interest in the family. If another member was in existence or in the womb of his mother at the time of the alienation, the power of the manager was circumscribed as aforesaid and his alienation would be voidable at the instance of the existing member or the member who was in the womb but was subsequently born, as the case may be, unless it was made for purposes binding on the members of the family or the existing member consented to it or the subsequently born member ratified it after he attained majority. If another member was conceived in the family or inducted therein by adoption before such consent or ratification, his right to avoid the alienation will not be affected. (p. 516) Therefore, under Hindu law, a person in the womb can interdict the alienation made by his father after his conception. However, this proposition is sought to be countered by the learned departmental representative on the ground that this doctrine of prescription does not fit in with the scheme of the Gift-tax Act, 1958 ('the Act') and the rights of the son would flow only from the date of his actual birth but not from the date of his conception, as otherwise great amount of uncertainty would settle in the scheme of income-tax and gift-tax laws.
In order to buttress this argument the learned departmental representative brought to our notice a decision of the Supreme Court in T.S. Srinivasan v. CIT  60 ITR 36 wherein it was held as follows : The doctrine that under Hindu law a son conceived or in his mother's womb is equal in many respects to a son actually in existence, in the matter of inheritance, partition, survivorship and the right to impeach an alienation made by his father, is not one of universal application and it applies mainly for the purpose of determining rights to property and safeguarding such rights of the son. This doctrine does not fit in with the scheme of the Income-tax Act and it was not the intention of the Legislature to incorporate the special doctrine into the Act. (p. 36) Applying the above ratio to the facts on hand it is sought to be contended for the revenue that for purposes of making an assessment under the Act the right of an unborn son under the general Hindu law cannot be made use of and, hence, if according to the latter Supreme Court decision if the right of interdiction is not available to Shri Venkataramaraju on 2-4-1955 and his rights flow only from 30-7-1955, the date of his birth Viswanadharaju should be considered to be the only sole surviving coparcener on 2-4-1955 when he made a gift in favour of his wife with regard to 39.96 acres. Such alienation is perfectly valid.
9 In our opinion, the argument of the learned departmental representative does not appear to be correct. Our limited purpose is to find out what were the rights acquired by Smt. Chandravathi under the deed dated 2-4-1955. Therefore, we have to consider what right she obtained under the deed as per the general Hindu law. In the case of T.S. Srinivasan (supra), the Supreme Court found it difficult to reconcile the doctrine of Hindu law to which we have adverted earlier, with certain provisions of the 1961 Act which included of course the charging section also. But, the Supreme Court then observed : Apart from the difficulty of reconciling this doctrine with the scheme of the Act, Mr. Sastri has not been able to satisfy us that any rights of the son are being affected by not recognising his existence for the purposes of Section 3 of the Act till he is actually born. Income-tax is a liability and it could not have been the intention of the Legislature to impose a liability on persons yet unborn. (p. 40) It is, therefore, clear that the observations in the case of T.S.Srinivasan (supra) have to be confined to application of the ratio decidendi in that case which the Supreme Court itself has explained in N.V. Narendranath v. CWT  74 ITR 190 at pages 198 and 199.
10. In the present case, we, therefore, need to know the quantum of interest which was the subject of transfer with reference to the application of the general Hindu law principles. We have the decision of the Madras High Court in Ranganathan Chettiar's case (supra). There certain movable property and certain inherited immovable property were gifted by the karta to his wife. The question was whether the transaction was exigible to gift-tax. The Madras High Court observed : As far as the third question is concerned, it is clearly dependent on the liability to gift-tax. The Supreme Court in Ammathayee alias Perumalakkal v. Kumaresan alias Balakrishnan AIR 1967 SC 569 has pointed out as follows (headnote) : So far as movable ancestral property is concerned, a gift out of affection may be made to a wife, to a daughter and even to a son, provided the gift is within reasonable limits. A gift, for example, of the whole or almost the whole of the ancestral movable property cannot be upheld as a gift through affection ; but, so far as immovable ancestral property is concerned, the power of gift is much more circumscribed than in the case of movable ancestral property. A Hindu father or any other managing member has power to make a gift of ancestral immovable property within reasonable limits for 'pious purposes'. What is generally understood by 'pious purposes' is gift for charitable and/or religious purposes. It also includes cases where a Hindu father makes a gift within reasonable limits of immovable ancestral property to his daughter in fulfilment of an antenuptial promise made on the occasion of the settlement of the terms of her marriage and the same can also be done by the mother in case the father is dead.
But, the gift made to wife by her husband of ancestral immovable property, out of affection, cannot be upheld, even where the husband is carrying out his father's wishes, for no such gift is permitted under Hindu law insofar as immovable ancestral property is concerned. Even the father-in-law, if he had desired to make a gift at the time of the marriage of his daughter-in-law, would not be competent to do so insofar as immovable ancestral property is concerned.
Bearing in mind these principles laid down by the Supreme Court, it would be clear that in the present cases the gift of immovable property made to the wife by the karta could not have been upheld. Such a gift would be wholly void. The first question is answered in the affirmative and in favour of the assessee. (pp. 222-23) It is, therefore, clear that where a gift is made by the karta to his wife of immovable property, the gift would be void. In the present case, the grant of a life interest to Smt. Chandravathi under the deed dated 2-4-1955 in immovable property, being a right in immovable property, would be a gift of immovable property and, therefore, would be void. The question whether the son Venkataramaraju was enciente on the date of the transaction or not, therefore, really ceases to be relevant, for the gift in any event would be void and we hold so.
11. In AIR 1964 SC 510, while listing out the rights of an unborn son, it was stated that his rights extend to interdict the alienation and to avoid alienation. In the case of CGT v. Bhupathiraju Venkata Narasimharaju  101 ITR 74, there are the following observations of the Andhra Pradesh High Court : ...They are extravagant and unreasonable. They are, therefore, void under the personal law. Those gifts are no doubt voidable at the instance of the coparceners who are effected by those gifts, but still those gifts are void as against all the persons other than the coparceners. The coparceners in this case are the father and three sons. The father, if the properties of the joint family are divided, will get only a one-fourth share. In view of all the facts it cannot by any stretch of imagination be held that those gifts made by the father are within reasonable limits. It is obvious that the father made those gifts to reduce his properties and to increase the property of his minor daughters. We, therefore, agree with the Tribunal that the legal effect of the gifts is that they are void.
(pp. 78-79) The observations of the Supreme Court to which we have referred are authority for the proposition that the interest which passed under the docu-ment of 2-4-1955 was also voidable at the instance of the enciente son after his birth. Nevertheless, the gift would still be void as against all persons other than the enciente son and this would include the revenue. If a gift is void against the revenue under the general law, then obviously no gift-tax can be levied. Therefore, since no interest passed to Smt. Chanda-vathi under the document of 2-4-1955, she could not have conveyed any interest under the document of 31-5-1970. Hence, we would hold that no gift could be brought to tax under the document of 31-5-1970. The cancellation of gift-tax levied is accordingly, upheld.