BHANDARI C.J. - The following question has been referred to this counter under section 66(1) of the Income-tax Act, namely :
'Whether the gift of a joint family asset worth Rs. 2,40,000 by Shri Raghbir Singh, karta of the family, to his wife, Sardarni Ahalya Bai, not being a transfer for consideration or in pursuance of any ante-nuptial arrangement or in connection with any arrangement to live apart, is valid and effective to divest the family of its title to the said shares without the consent of the other adult coparcener, Shri Raghbir Singhs son, Shri Harindar Singh ?'
Sardar Raghbir Singh, assessee, and his only son Sardar Harindar Singh are members of a Hindu undivided family which possesses landed and other property, the value of which runs into several millions.
Sardar Raghbir Singhs wife, Sardarni Sujan Kaur, died in the year 1943 and he contracted a marriage with Sardarni Ahalya Bai in or about the year 1945. On the 31st March, 1949, the assessee made a transfer entry in the books of the family debiting the capital account with a sum of Rs. 2,40,000 representing 80 per cent. share capital of 300 shares of the Simbholi Sugar Mills Limited and crediting the account of Sardarni Ahalya Bai with a corresponding amount. In the year 1950-51 the assessee, who is the karta of the Hindu undivided family, submitted a return in which he declared an income of Rs. 1,03,952. This return did not include the income on 300 shares of the Simbholi Sugar Mills which had been transferred by the assessee to his wife. Sardarni Ahalya Bai submitted a separate return of her own in which she declared that she had received a sum of Rs. 48,000 by way of income on the shares which had been transferred to her.
The Income-tax Officer came to the conclusion that the assessee had transferred property to his wife without the consent of the other coparcencer, that this transfer was effected without legal necessity and without a corresponding benefit to the estate arising out of this transfer, and that the gift of property was neither reasonable nor for performing indispensable acts of duty nor for pious purposes. He accordingly included in the familys assessment for the year 1950-51 an income of Rs. 48,000 on account of the dividend on the shares which had been transferred to his wife. The order of the Income-tax Officer was upheld by the Appellate Assistant Commissioner and later by the Appellate Tribunal. In one of the paragraphs of the order the Tribunal observed as follows :
Obviously the transfer, if real, was without consideration. It is not in pursuance of any ante-nuptial arrangement, nor is it in connection with any agreement to live apart. The gift of a point family asset of such magnitude (Rs. 2,40,000) by the Karta to his wife would be void. There is nothing to show that his son consented to the gift. Raghbir Singh says in an affidavit filed by him on September 30, 1950, that this son has no objection to the transfer; but the assertion should come from the son himself, not from the father who is the author of the alleged gift. The son would have, of course no objection to the transfer of registry of the shares to his stepmother, if that would lighten the tax burden on the family, so long as the real title of the family to the shares is not affected. In the absences of a contemporaneous solemn declaration irrevocably binding on both the male coparceners that the transfer to the lady was a real and valid gift inteded to be acted upon for all purposes, we are unable to hold that the shares have ceased to belong to the family. We confirm the inclusion in the familys assessment for 1950-51 of the dividend income from shares in Sardarni Ahalayas name.'
At the request of the assessee the Tribunal has referred to this court the question which has been set out at the commencement of this order.
S. Dewa Singh, who appears for the assessee, contends that the question as framed does not bring out the matters in controversy between the parties abnnd that the question should be re-framed so as to run as follows, namely :
Whether in view of the facts of the case the income arising from the dividend on the shares gifted to Sardarni Ahailya Bai could be included in the hands of the Hindu undivided family ?'
Three things are essential to every gift, a donor, a done, and a thing to be given; and three essential elements of a gift are donors intention to make a gift, delivery actual or constructive, and acceptance by the done. A Hindu father has full power to alienate coparcenary property with the consent of his sons, but his power to part with such property without their consent is limited by the scriptures. In section 225 of Mullas Principles of Hindu law the learned author declares that although sons acquired by birth rights equal to those of a father in ancestral property both movable and immovable, the father has the power of making within reasonable limits gifts of ancestral movable property without the consent of his sons for the purse of performing indispensable acts of duty, and for purposes prescribed by text of law, as gifts through affection, support of the family, relief from distress and so forth. A gift of affection may be made to a wife, to and so a daughter, and even to a son. But the gift must be of property within reasonable limits. A gift of the whole, or almost the whole, of the ancestral movable property to one son to the exclusion of the other sons cannot be upheld as a gift through affection prescribed by the texts of law.'
Mr. Sikri who appears for the Department contends (1) that the impugned gift is void and not voidable, (2) that even if it is voidable does not divest the family of its title (a) because it is not a gift of affection, (b) because the assessee had no intention of making a gift, and (c) because the so-called gift cannot be said to be a gift of property within reasonable limits.
In support of his contention that the gift is void and not merely voidable reliance has been placed on section 404 of Maynes Treatise on Hindu Law and Usage. This section is in the following terms :
The question whether an alienation made by a father or other manager which is neither for a legal necessity nor for the discharge of an antecedent debt, is void or voidable has given rise to conflicting judicial opinions. Such an alienation must on principle be invalid as against the members of the family from its inception though they can select to abide by it. The possession of a purchaser under an unauthorised ailnemation by the manager will be wrongful unless it is assented to or ratified by the other coparceners'.
Whatever conflict of judicial opinion may have manifested itself in other States, judicial opinion in regard to law as it obtains in the Punjab is fairly consistent. According to the Hindu law as interpreted in the Punjab no member of a joint Hindu family can, in the absence of custom to the contrary, alienate even his own share in the undivided estate without the consent of his coparceners; but such an alienation is an act which is not necessarily and ipso facto void, but it is merely voidable by the cosharers if they choose to repudiate it (Bank Rai v. Madho Ram. Imperial Bank of India v. Maya Devi Mt. Piari v. Kishori Rawanji Maharaj. This view is consistent with the view taken in Hanuman Kamat v. Hanuman Mandur where their Lordship of the Privy Council held that the alienation by a manager was not necessarily void, but was only voidable if objection were taken to it by the other members of the joint Hindu family. A similar view has been taken by certain other High Courts in the country, Subba Goundan v. Krishnamachari, Bhirgu Nath Chaubev. Narsingh Tiwari. Indeed certain courts have gone to the length of holding that a deed of assignment executed by one of the two kartas of a joint Hindu family is voidable at the option of the other coparceners who alone may be affected by his unauthorised act, and no person who is a stranger to the family and does not possess a right to have the transaction defeated on other grounds for example under section 53 of the Transfer of Property Act, has a locus stand to intervene and impugn such an alienation merely because it is in excess of his authority to deal with the property for family purposes : Ram Kumar Ram Saraff v. Mohan Lal Maharaj Pankajini Debi v. Pramata Nath Ghosh.
In view of these decision I have no hesitation in holding that the gift is not void but merely voidable and the it was open to S. Harindar Singh who is the other member of this joint Hindu family to avid it. He has not cared to do so, though several years have gone by. On the contrary there is evidence to show that the assented to the gift for he was present at the meeting of the board of directors of the Simbholi Sugar Mills which was held on the 28 the December 1948 and in which the question of the transfer of 300 shares to Sardarni Ahalya Bai was taken up for consideration. It is contended that the mere passive acquisecence of the son cannot be deemed to be 'consent' which implies some positive action and always involkves submission, and that the utmost that can be said in the present case is that the son merely assented to the proposal of his father, for 'assent' means passivity or subbmission which does not include consent. It is true that 'consent' in law means an affirmative, positive act and that 'assent' means passiv ity or inaction, but it must be remembered that although the son did not expressly assent to the transfer of the shares by his father to his step-mother, the fact remains that he was aware of the transfer and that he took no step to challenge the gift. The expression 'consent' has come to acquire a some what peculiar meaning under the Hindu law. In Bank Rai v. Madho Ram a learned judge of the Chief Court of the Punjab observed :
'So far therefore as I have been able to consult the authorities on Hindu law, the giving or with holding of consent would appear to have been intended as a mere privilege of the coparceners. Indeed the very conditions of assent implies the possibility of the act being legal; for the void act is a thing that has no legal inceptional and is a mere nullity ab inito. That this is the true doctrine of the Hindu law becomes to my mind all the more manifest when we bear in mind what is the legal definition of assent in that system of law. The assent required says Katyayana, is found in the want of opposition, for it is rule-not to forbid is to assent, a rule which corresponds in a remarkable manner with the familiar maxim of the civil law, qui non probate quo prohibere protest asserntire videtur. This definition seems to show that express consent is not necessary, and that in order to prove that the co-shares assented to the transactions all that need be established is that having the power to forbid the act, which implies that they knew of it, they neglected to exercise that power.'
It seems to me therefore that by his acquiescence S. Harindar Singh must be deemed to have assented to the gift of 300 shares to his step-mother Sardarni Ahalya Bai.
Mr. Sikri contends that the gift the validity of which is being challenged in the present case, cannot be said to be a gift of a affection for it is not make with the intention of making gift but with the intention of avoiding payment of income-tax. The Simbholi Sugar Mills Limited, it is argued, is to all intents and purposes a family concern as the family owns nearly 800 out of 1,200 shares. If the family controls the company and if it can easily prevent an alienation by the Sardarni Sahiba, it is wholly immatrial whether the shares stand in the name of the assessee or of his wife. This being so, it is contended, the shares were transferred to Sardarni Ahalya Bai not with the object of Manifesting the donors love and affection for his wife but with the object of evading payment of the tax which would be recoverable on the income of the shares. I regret I am unable to concur in this contention. A taxpayer has full liberty to decrease what otherwise would be his taxes, or altogether to avoid them, by means which the law allows. The fact that a certain transaction has been entered into with the ulterior object of enabling the taxpayer to avoid payment of income-tax would not render the transaction void, for motive alone cannot make unlawful, what the law allows. In such a case the transactions should be examined with the object of seeking whether it is in reality what is appears to be in form. As pointed out by an Amercian jurist, purpose may be the touchstone, but the purpose which counts is one which defeats or contradicts the apparent transaction not the purpose to escape taxation. if therefore a taxpayer alters the basic facts affecting his liability to taxation by legal means available to him but for the purpose of avoiding taxation, the court will uphold the changes unless it is satisfied that the changes are not actual, but merely simulated. The question is not whether the motive for the transaction was proper or otherwise but whether what the taxpayer has done actually accomphishes the result anticipated.
Now that was the intention of the assessee in the present case in the altering the books of accounts of the family and crediting a large sum of money in the account of Sardarni Ahalya Bai. Intention has been defined as the fixed direction of the mind to a particular object or a determination to act in a particular manner, and it is distinguishable from 'motive' that which incites or stimulates actions. A mans intention ought to be judged by his acts and not from what may be in his mind. It should be ascertained by taking into consideration the entire transaction. A man is presumed to intend the natural and probable consequence of his own acts and it must therefore be assumed that the assessee in the present case intended every consequence which was the natural and immediate result of the act which he voluntarily did. On the 25th November, 1948 he requested the Simbholi Sugar Mills to transfer 300 shares of the said Mills belonging to the Hindu undivided family to Sardarni Ahalya Bai. The board of director approved of this transfer on the 7th December, 1948, and confirmed this decision on the 28th December, 1948. On the 31st March, 1949, after this transfer has been made the assessee made a transfer entry in the books of the family debiting the capital account with a sum of Rs. 2,40,000 representing 80 per cent. of the share capital of 300 shares and crediting the account of his wife and with a similar amount. On the 30th September, 1950, he submitted an affidavit in which he declared that the said shares were given or to his wife during the financial year 1948-49, that none of the family members had any objection to the said transfer, that the said shares had ceased to remain an assets of the Hindu undivided family, that the transfer was irrevocable and that the shares had become the exclusive property of the donee. The consequences which the donor contemplated and which he expected to result from these act were that the family would cease to own 300 shares and that the done would acquire full proprietary rights in the said shares. He manifested a clear intention to relinquish the right of dominion on the one hand and to created it on the other. The intention to make a gift was a present intention. He put it in the power of the donee to claim ownership of the shares, to receive of ownership. This gift was made by the donor to his own wife and must therefore be presumed to have been made out of love and affection.
Assuming for the sake argument that the gift was not made with the consent of S. Harindar Singh there question arises whether the gift itself was reasonable. There can be no doubt that a Hindu father governed by the Mitakshara has full power to make within the reasonable limits gifts of movable property to his wife, daughter etc., and the courts have consistently upheld such gifts. The gifts which have been held to be reasonable include the assignment of a manufacturer mortgage by a father to his daughters of the aggregate amount of Rs. 8,000, (Ramalinga Annavi v. Narayana Annavi), a gift by a father-in-law of Rs. 2,000 to his daughters-in-law in property of the total value of Rs. 23,000 (Hanmantapa v. Jivubai), a gift by a father to his daughters of 8 acres of land out of 100 acres possessed by him on the occasion of her marriage (Sundaramayya v. C. Sitamma), a gift by a father to his daughters of 3 acres of land (Annamaliai Ammal v. Sundarathammal). In Bachoo Harkisondas v. Mankoreabai the sole surviving members of a joint Hindu family owning property worth ten lacs to fifteen lacs, out of the income of such property, made a gift of Rs. 20,000 to his daughters and only child. Tyabji, J., set aside this gift on the ground that the donor could not make a valid gift of this large sum of money even to his own daughter for although the manager of a Hindu family is at liberty to make ordinary gift or presents on suitable occasions, this power must be confined to such occasions as are usual and to such presents as are customary. A Division Bench of the same court which was called upon to deal with this case in appeal were unable to uphold the view taken by the learned single Judge. They observed as follows :
'It should be borne in mind what the position of the family was at the date of the gift. Bhagwandas was the only living male member of the family and has daughter, Naval, was the only female born in the family, and in the absence of posthumous birth of a son or on adoption she was the persons who in the ordinary course of events would probably become entitled to the whole estate. The value of the estates was from 10 to 15 lacs, so that even if the Government promissory notes had been purchased out of the corpus of the estate it would have represented only one-fiftieth part of the estate or possibly less. Now this income in the hands of Bhagwandas was not immovable property, nor was he under any obligation to invest it in immovable property; it was movable property. This distinction is not without importance.'
The view taken by the Division Bench was endorsed by the Privy Council in Banchooo Harkisondas v. Mankorebai when their Lordships observed as follows :
'As to the facts of the gift and the transfer there is now no controversy. At the time of the gift Bhagwandas was the head of the family, and indeed the only male members of it, and the estate was large Tyabli, J., considered that the gift was not justified by the circumstances of the case. The court of appeal, having in the meantime ascertained that the gift was made out of income not out of capital, took a different view and decided in favour of Navalbai.'
Mr. Sikri admits that it was within the power of the assessee, in his capacity as father of s. Harindar Singh, to transfer by way of gift a part of the ancestral movable property of the joint Hindu family, but he contends that the value of the gift which was made in the present case was so large that it cannot possibly be said to fall within the ambit of the expression 'reasonable limits.' In any case, he contends on the authority of Lakshman Dada Naik v. Ramachandra Dada Naik, that this court should not extend the doctrine of alienability by a coparcener of his undivided share without the consent of his co-shares beyond the decided cases.
The expression 'reasonable' means 'rational according to the dictates of reason and not excessive, or immoderate.' An act is reasonable when it is conformable or agreeable to reason, having regard to the facts of the particular controversy. The question whether a particular gift made by a Hindu father is within reasonable limits must be answered with reference to the facts and circumstances of the particular case, the word 'reasonable' meaning what is just, fair and equitable in view of the value, income and financial position of the estate, the number of persons who constitute the joint Hindu family, the relationship which the donor bears to the donee and any other circumstances which may appear in the case and are relevant and material to its determination.
The assessee in the present case is one of the richest landlords of the Amritsar district and the family to which he belongs derives income not any from house property, securities dividends, shares and profits of firms which are assessable to income-tax but also from a large and valuable estate known as the Raja Sansi Estate which is not assessable to income-tax. The income of the family assessable to income-tax rose from Rs. 1,50,000 in the year 1944-45 to Rs. 2,50,000 in the year 1950-51. The value of the family assets, including the agricultural estate, which, I have stated already, is not assessable to income-tax, must be of the magnitude of several millions of rupees. In the circumstances it seems to me that the gift by the assessee of shares of the value of Rs. 2,40,000 cannot be considered to be unreasonable. The only members of the joint Hindu family are the assessee and his son. If common sense were applied to the whole situation, would it be possible to contend that a gift of shares of the value of Rs. 2,40,000 by the assessee to his wife is not within a reasonable limits It represents much less than the annual income of the estate during the year 1950-51 and only a very small fraction of the total value of the estate. The purchasing power of the rupee has gone down considerably and the authorities on which Mr. Sikri places his reliance cannot furnished a good guide for deciding whether the gift which was made in the present case was reasonable.
for these reasons, I would hold that the gift of a joint family assets of the value of Rs. 2,40,000 by Shri Raghbir Singh karta of the family, to his wife Sardarni Ahalya Bai, being a gift of affection of reasonable share of ancestral movable property, is valid and effective and divests the family of its title to 300 shares of the Simbholi Sugar Mills Limited even if the said gift was made without the consent of the other adult coparcener namely Shri Raghbir Singhs son, Shri Harindar Singh.
Let an appropriate answer be returned.
TEK CHAND J. - I agree.
Reference answered in the affirmative.