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Commissioner of Gift-tax Vs. C. Thiruvenkata Mudaliar - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtChennai High Court
Decided On
Case NumberTax Case No. 372 of 1970 (Reference No. 119 of 1970)
Judge
Reported in[1977]107ITR661(Mad)
ActsGift Tax Act, 1958 - Sections 2
AppellantCommissioner of Gift-tax
RespondentC. Thiruvenkata Mudaliar
Appellant AdvocateA.N. Rangaswami and ;Nalini Chidambaram, Advs.
Respondent AdvocateG.R. Lakshmanan, Adv. for ;G. Ramaswami, M.S. Sadanand and V. Sundaramurthy
Cases ReferredVenkatachalam Chetty v. Govinda
Excerpt:
direct taxation - nature of document - section 2 of gift tax act, 1958 - whether tribunal right in holding that deed of settlement effected by assessee was will not attracting provision of act - if document provides for immediate transfer of interest from original owner to somebody else it will constitute gift - no provision in document transferring any interest in immovable property in favour of any of settlees - held, tribunal right in holding that provision of act not attracted. - - now this deed of settlement witnesseth that in consideration of the above premises and out of the natural love and affection which the settlors have towards the settlees, the settlors do hereby settle properties more particularly described in the schedule hereunder written as follows :1. the settlors.....ismail, j. 1. the income-tax appellate tribunal, madras bench, under section 26(1) of the gift-tax act, 1958 (central act 18 of 1958), at the instance of the commissioner of gift-tax, madras-ii, has referred the question for the opinion of this court : 'whether, on the facts and in the circumstances of the case, the appellate tribunal is right in holding that the deed of settlement effected by the assessee on july 1, 1963, is really a will not attracting the provisions of the gift-tax act, 1958 ?' 2. from the very question extracted above, it is clear that the only point involved is the construction of the document dated july 1, 1963, executed by the assessee-respondent and his wife. since what is involved is the construction of the document and the tribunal has dealt with the matter in.....
Judgment:

Ismail, J.

1. The Income-tax Appellate Tribunal, Madras Bench, under Section 26(1) of the Gift-tax Act, 1958 (Central Act 18 of 1958), at the instance of the Commissioner of Gift-tax, Madras-II, has referred the question for the opinion of this court :

'Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is right in holding that the deed of settlement effected by the assessee on July 1, 1963, is really a will not attracting the provisions of the Gift-tax Act, 1958 ?'

2. From the very question extracted above, it is clear that the only point involved is the construction of the document dated July 1, 1963, executed by the assessee-respondent and his wife. Since what is involved is the construction of the document and the Tribunal has dealt with the matter in great detail after referring to the concept and connotation of a will and a gift found in several text books and also considering how particular documents have been construed by courts as a will or a gift, we consider it desirable to extract the entire document omitting the schedules only.

'Deed of settlement executed at Madras this first day of July, 1963, by (1) Dewan Bhahadur C, Thiruvenkata Mudaliar, son of C. Ramanuja Mudaliar, Hindu, residing at No. 12, Boag Road, Theagaraya Nagar, Madras, and (2) Mrs. Yeshoda Bai Thiruvenkatam, wife of Dewan Bahadur C. Thiruvenkata Mudaliar, Hindu, residing at the same address, hereinafter referred to as the settlors, which terms shall mean and include their heirs, executors, administrators, legal representatives and assigns and of each of them to and in favour of, (1) C. T. Gopalakrishnan, Agent, Esso, residing at No. 41, Periamaniagara Street, Chingleput, and (2) C.T. Radha-krishnan, Project Engineer, Heavy Elect-deals Ltd., Tiruchirapalli, both Hindus, sons of Diwan Bahadur C. Thiruvenkata Mudaliar, hereinafter referred to as the settlees which terms shall mean and include their heirs, executors, administrators, legal representatives and assigns and of each of them.

Whereas the first settlor retired as Chief Commissioner of Coorg and is aged 74 years and the second settlor is his wife aged 60 years.

And whereas the first settlor under a partition deed dated April 17, 1939, relinquished his share of the ancestral property consisting of a house in Conjeewaram to his step brothers, C. R. Bashyam and C. R. Nithyanandam, and out of his own self-acquisitions purchased seven grounds and 2,348 square feet from the Corporation of Madras in the name of his wife, the second settlor under a registered deed of sale dated August 16, 1937, andconstructed with his own funds the premises No. 12, Boag Road, Theaga-raya Nagar, Madras, naming it as Yeshoda, which is his wife's name.

And whereas likewise the first settlor was granted thirty cents by the Government on June 17, 1942, and he purchased 12 cents from the Government on April 21, 1958, and constructed with his own funds premises named as 'Un Arul' and bearing No. 2, Vadagiri Street, Adivaram, within the limits of Palani Muncipality.

And whereas one of the said properties though it stands in the name of the second settlor belongs absolutely to the first settlor and both the properties are in his enjoyment and possession as sole owner thereof.

Whereas the first settlee has six daughters and the second settlee has four sons and a daughter.

And whereas in view of his advancing age and with a view to avoid any disputes or controversies which may arise after his lifetime regarding division of properties, the first settlor is desirous of settling the two items of properties aforesaid in favour of his two sons, the settlees herein, and their heirs in the manner hereinafter appearing and the second settlor, his wife, though she has no legal right to the properties, has joined in the execution of this settlement deed as one of the properties stands in her name.

Now this deed of settlement witnesseth that in consideration of the above premises and out of the natural love and affection which the settlors have towards the settlees, the settlors do hereby settle properties more particularly described in the schedule hereunder written as follows :

1. The settlors shall continue to enjoy both the items of properties set out in the schedule during the lifetime of both the settlors and will themselves pay the taxes and other dues of a public nature in respect of the same. The settlors shall have no power to alienate or otherwise dispose of the same in any manner such as by way of gift, exchange, mortgage, etc.

2. Subsequent to the lifetime of both settlors, the first settlee, C. T. Gopalakrishnan, shall take and enjoy house and ground No. 12, Boag Road, Theagaraya Nagar, Madras, being item 1 of the schedule during his lifetime without any power to alienate or dispose of the same in any manner such as by way of gift, exchange, mortgage, etc.

3. After the lifetime of the first settlee, C. T. Gopalakrishnan, his heirs shall take and enjoy the said house aud ground No. 12, Boag Road, Theagaraya Nagar, Madras, absolutely as full and beneficial owners absolutely and for ever peaceably and quietly without any let or hindrance from any persons whatsoever.

4. Likewise, subsequent to the lifetime of the settlors, the second settlee, C. T. Radhakrishnan, shall take and enjoy house and ground No. 2, Vadagiri Street, Adivaram, Palani, being item No. 2 of the schedule duringhis lifetime, without any power to alienate or dispose of the same in any manner such as by way of gift, exchange, mortgage, etc.

5. After the lifetime of the second settlee, C. T. Radhakrishnan, his heirs shall take and enjoy the said house and ground No. 2, Vadagiri Street, Adivaram, Palani, absolutely as full and beneficial owners absolutely and for ever peaceably and quietly without any let or hindrance from any persons whatsoever.

6. The settlees during their lifetime shall maintain the respective properties in good repair and pay the taxes and other dues of a public nature.

7. The settlors shall have no right to revoke this deed of settlement.'

3. The Tribunal has held that the document contains a testamentary disposition and did not constitute a 'gift' and, therefore, the provisions of the Gift-tax Act are not applicable to the transaction in question. It is the correctness of the order of the Tribunal that is challenged by the Commissioner of Gift-tax in the form of the question referred to alteady. Since. we have given the document in full, we shall merely refer to the salient features present in the document which lead to its construction one way or the other.

4. In the first place, the document is styled as a settlement. Secondly, it is stamped and registered as a settlement. Thirdly, there is an express provision in Clause 7 thereof that the settlors shall have no right to revoke this deed of settlement. It is based on these features that the learned counsel for the department contends that the transaction in question will - constitute only a settlement and, therefore, a gift. On the other hand, the contention of the learned counsel for the assessee is that, notwithstanding the nomenclature given by the parties and notwithstanding the fact that it has been stamped and registered as a settlement and notwithstanding the provision contained in the document to the effect that it will be irrevocable, having regard to the disposition contained in the document, it will constitute only a will and not a gift, because there is no transfer in praesenti of any interest whatever in the properties comprised in the document. Which of these two contentions is correct is the question for consideration.

5. There is no difficulty in understanding the characteristics as to what constitute a will and what constitute a gift. In the case of a will, the crucial circumstance is the existence of a provision disposing of or distributing the property of the testator to take effect on his death. On the other hand, in the case of a gift, the provision becomes operative immediately and a transfer in praesenti is intended and comes into effect. From the very nature of the case, a will is revocable because no interest is intended to pass during the lifetime of the owner of the property and, therefore, even if a will contains a Clause that it is irrevocable, the law makes it revocable.

6. Similarly, in the case of a gift, because it comes into operation immediately, even if it contains a clause that the settlor or the donor can revoke it, still it will remain irrevocable under the law because the donee obtains his interest in the property on the execution of the document itself. Consequently, whether a particular document contains a provision as to whether it is revocable or irrevocable is not decisive of the question whether it is a will or a gift. Equally, the caption or the nomenclature given by the parties to the transaction is again not decisive of the question as to whether it is a will or a gift. If a particular document provides for immediate transfer of the interest from the original owner to somebody else, notwithstanding the fact that the parties called it a will, it will operate only as a gift. Similarly, if a document contains provisions which undisputably show that the disposition must come into existence only on the death of the executant of the document, even if the parties call it a settlement, it will be only a will. Therefore, the nomenclature given by the parties to the transaction in question is again not decisive. Similarly, a will need not necessarily be registered. But if the parties take the trouble of having it registered for certain purposes particularly with a view to avoid any dispute about the execution of the will later, the fact of registration alone will not render the document a settlement if it, in other respects, is a will. So also with regard to a gift, since the law of registration requires a gift to be registered and on that account the transaction may become void if it is not registered, the want of registration itself will not show that the parties did not intend the transaction to be a settlement. Consequently, none of the three circumstances which are present in the case on hand to which we have drawn atten-tiod is conclusive either individually or collectively in establishing the document in question as a settlement. Therefore, the real and the only reliable test for the purpose of finding out whether the document constitutes a will or a gift is to find out as to what exactly is the disposition which the document has made, whether it has transferred any interest in praesenti in favour of the settlees or it intended to transfer interest in favour of the settlees only on the death of the settlors.

7. We may now summarise the provisions contained in the document in relation to the disposition. Those provisions are:

(i) The settlors were to continue to enjoy both the items of properties during their lifetime.

(ii) The settlors will have no power to alienate or otherwise dispose of the property in any manner such as by way of gift, exchange, mortgage, etc.

(iii) After the death of both the settlors, Gopalakrishnan, one of the sons, should enjoy the property at Theagarayanagar during his lifetime without any power of alienation by way of gift, exchange, mortgage, etc.

(iv) After the lifetime of Gopalakrishnan, his heirs would take and enjoy the said property at Theagarayanagar as full owners absolutely.

(v) Similarly, subsequent to the lifetime of the settlors Radhakrishnan, the other son, was to take and enjoy during his lifetime the property at No. 2, Vadagiri Street, Adivaram, Palani, without any power of alienation or disposal of the same.

(vi) After the death of Radhakrishnan, his heirs would take and enjoy the property at Palani as full and beneficial owners absolutely.

(vii) The settlors had no right to revoke the deed.

8. From the above provisions, we have to find out whether the settlor -had intended to create an interest in favour of Gopalakrishnan or his heirs and Radhakrishnan or his heirs in praesenti.

9. Mr. A. N. Rangaswami, learned counsel for the department, stressed the following feature present in the document, in addition to the three features referred to already. He submitted that the settlors have imposed a restriction on themselves to the effect that they will only enjoy the properties for their lifetime and they will not in any way alienate or encumber the property. We are of the opinion that this by itself will not conclude the question in favour of the contention of the department. It is admitted that in the dispositive Clauses 1 to 6 in the document there is nothing to show that any interest in praesenti was created in favour of either of the two sons or their heirs. However, Mr. Rangaswami relied on the earlier portion preceding the dispositive clauses wherein it is stated thus :

'...the settlors do hereby settle the properties more particularly described in the schedule hereunder written as follows.'

10. The learned counsel stressed on the word 'settle' occurring in the said sentence and contended that that word by itself would show the intention of the settlor to create an interest in praesenti in favour of the two sons and their heirs. The learned counsel also contended that the document itself makes it clear that the property belonged exclusively to the first settlor, namely, the assessee herein, and his wife, the second settlor, had no interest whatever in the properties covered by the document and, therefore, the provision that both the settlors shall enjoy the properties for their lifetime will show that there was a creation of life interest in favour of the second settlor first and thereafter a life interest in favour of the two sons and an absolute interest in favour of the heirs of the two sons. We are unable to accept this argument for the simple reason that the very first dispositive clause states that 'the settlors shall continue to enjoy both the items of properties set out in the schedule during the lifetime of both the settlors', and, therefore, it is clear that even before the settlement deed both the settlors were enjoying the properties and what is contemplated by the first clause is the continuance of that position even subsequent to theexecution of the document. The second aspect to be taken note of is that in every one of the clauses from Clause 2 to Clause 5, the provision is that the respective parties will take and enjoy the property only after the lifetime of the preceding party. For instance, Clause 2 begins by saying that subsequent to the lifetime of both the settlors, the first settlee, C.T. Gopala-krishnan, shall take and enjoy house and ground No. 12, Boag Road, Theaga-rayanagar, Madras, during his lifetime without any power to alienate. Similarly, Clause 4 states that subsequent to the lifetime of the settlors, the second settlee, C. T. Radhakrishnan, shall take and enjoy the house and ground No. 2, Vadagiri Street, Adivaram, Palani, without any power to alienate. In respect of the heirs, Clause 3 states that after the lifetime of the first settlee, C. T. Gopalakrishnan, his heirs shall take and enjoy the house and ground No. 12, Boag Road, Theagarayanagar, Madras, absolutely as full owners. Similarly, Clause 5 states' that after the lifetime of the second settlee, C. T. Radhakrishnan, his heirs shall take and enjoy house and ground No. 2, Vadagiri Street, Adivaram, Palani, absolutely as full owners. Therefore, with regard to the second settlor, namely, the wife of the first settlor, the provision is for the continuance of the enjoyment of the property as before and with regard to the two sons, the provision is for their taking and enjoying the property after the lifetime of the settlors, and with regard to the heirs of these two sons the provision is that they will take and enjoy the properties absolutely after the lifetime of their respective fathers. Therefore, from these provisions it is indisputably clear that there is absolutely no disposition in praesenti of any interest whatever in favour of anyone of the settlees. Consequently, simply as a matter of construction of the document, we come to the conclusion that, there being no provision in the document for transferring any interest in the immovable properties dealt with thereunder in favour of any one of the parties in praesenti, notwithstanding the fact that it is styled as a settlement and stamped and registered as a settlement and the settlors have provided that the document is irrevocable, the dispositions contained in the document are only testamentary in character and not inter vivos and, therefore, they cannot constitute a gift so as to attract the provisions of the Gift-tax Act,1958.

11. Normally speaking, every document has to be construed with reference to the language it contained and, therefore, a decision construing one document cannot be an authority for construing another document except to the extent that the said decision may lay down certain principles or guidelines. The only general principle or guideline that can be said to have been laid down in this behalf is that the document should be read as a whole and it is the substance of the document that matters and not the nomenclature, and what determines the character of the document is the nature of thedisposition contained therein as to whether it was intended to take effect in praesenti or it was intended to take effect on the death of the owner of the properties.

12. Several decisions appear to have been cited before the Tribunal and a few decisions were cited before us also. Mr. A. N. Rangaswami very strongly relied on a decision of the Andhra Pradesh High Court dealing with the provisions contained in the Gift-tax Act itself reported in Vadulla Venkata Rao v. Commissioner of Gift-tax : [1972]85ITR249(AP) . The learned judges set out the following as the material facts :

'During the previous year relevant to the assessment year 1964-65 the assessee, an individual, had executed a deed of settlement on 24th August, 1963, whereby he settled certain lands obtained by him in the family partition between him and his son. The assessee himself was the first beneficiary till his lifetime and thereafter his wife was to enjoy the settled properties till her lifetime without any power of alienation and finally they should go to his son with absolute rights. The value of the lands gifted by the assessee was shown as Rs. 42,935 which was not in dispute. The Gift-tax Officer had deducted Rs. 12,453 towards the life interest of the assessee in those lands and determined the value of the reversionary interest of his wife at Rs. 30,482 which is within the permissible exemption provided to a spouse under Section 5(1)(viii) of the Act. As in his opinion there was a gift in favour of the assessee's son which was liable to tax, its value was determined at Rs, 17,757 after deducting Rs. 12,725 representing the value of the life interest of the assessee's wife.

The contention of the assessee that the value of Rs. 17,757 of the gifted property was not liable to tax as the donee was not entitled to the possession and enjoyment of his interest in the year of assessment was rejected by the Gift-tax Officer, who subjected that gift to tax. On appeal, the Appellate Assistant Commissioner upheld the contention of the assessee and allowed the appeal. Aggrieved by that decision, the Gift-tax Officer preferred an appeal to the Income-tax Appellate Tribunal which reversed the finding of the Appellate Assistant Commissioner and restored the assessment order. Hence, at the instance of the assessee, this reference has been made.'

13. Having set out the facts thus, the court proceeded to state :

'Sri K. B. Krishnamurthy, the learned counsel for the assessee, contended that the transfer of interest in the settled property in so far as the son is concerned does not amount to 'gift' within the meaning of the Act, as there was no right to the donee to enjoy the same till the lifetime of the father and mother, the beneficiaries.'

14. It is this contention which was rejected by the Andhra Pradesh High Court and we are of the opinion that that decision is not of any assistancewhatsoever for the present case, because the decision has not given the recitals contained in the document which the Andhra Pradesh High Court assumes to be a settlement. Therefore, no reliance can be placed on that judgment on behalf of the department.

15. The next decision relied on by the learned counsel is that of a Bench of this court in Bakiam v. Valli Ammal : (1963)1MLJ150 . In that decision, one Alagayee executed the settlement deed on 17th September, 1910. Under that document, she declared that she should, during her lifetime, enjoy the properties settled, that thereafter her son, Tambaram, and his wife should enjoy them without any powers of alienation, that on the termination of their life, Raju and his younger brother, Meenakshisundaram, the grandsons of the settlor, should enjoy the income from the properties without alienating the corpus, and that, after their lifetime, the remainder should be taken absolutely by the regular issue of Raju and Meenakshi-sundram. The terms of the document were :

'I shall enjoy the properties set out herein till my lifetime as I have been doing before, and, after my lifetime, my son, Muthuswami, and his wife, Papammal, shall enjoy the income derived from the properties till their lifetime without alienating the properties in any manner. And after their lifetime, these two persons, namely, the said Raju Pillai and his younger brother, Meenakshisundaram, shall enjoy the income derived from the properties set out till their lifetime without alienating the same. After their lifetime, the legitimate heirs born to them shall be put in possession of the immovable properties set out herein free of encumbrance and they and their heirs shall hold and enjoy the same hereditarily with powers of alienation such as gift, exchange and sale, etc.'

16. The dispute arose as a result of the suit instituted by Valliammal, mother of Muthuswami, who died in 1920, and the widow of Meenakshisundaram, who died in 1919, for partition of the properties putting forward the contention that she was entitled to one-half of the properties on the ground that Muthuswami on his birth acquired a vested interest in one half of the properties which on his death passed on to her as his mother. The argument that was advanced on bebalf of Bakiam, the son of Raju, who died after Meenakshisundaram, before this court was that under the deed of settlement, Raju and Meenakshisundaram obtained no interest in the corpus of the property, but what they obtained was only an interest for life in the usufruct, the corpus being reserved for their children who were to take it as a class when the time for distribution came, which, under the document, was fixed to be the time of the death of the survivor amongst the two grandsons; and as at that time there was no one living answering the description as regular issue of Raju and Meenakshisundaram except the appellant (Bakiam) he alone would be entitled to the propertiesunder the settlement. It was this contention that was considered and dealt with by this court, and there was no controversy as to whether the document constituted a will or a gift. As a matter of fact, that question could not have arisen, because admittedly the disputes arose after the death of Alagayee, the person who executed the document, and, therefore, the controversy related only to the terms of the disposition and not to the nature of the disposition whether it was testamentary or inter vivos. Therefore, this decision also is not of any assistance to the learned counel for the department.

17. Mr. Rangaswami then relied on a decision of Mohan J. in Sakuntala Ammal v. Pattammal : (1976)1MLJ296 . In that case a controversy arose as to whether the document constituted a gift or a will. The learned judge who has extracted the relevant provision of the document held that, having regard to the terms of the document, it constituted only a gift and not a will. The learned judge pointed out that there was a desire on the part of the executant to give the property in favour of her husband, the executant had undertaken that the property would not be encumbered nor alienated during the lifetime of the executant and she would enjoy only the income therefrom and that after the lifetime of the executant possession is to be taken by the legatee (sic) and to be enjoyed from generation to generation absolutely. The learned judge having regard to these provisions in the document held that it constituted only a settlement and not a will. For the reasons already indicated, namely, every document has to be construed with reference to the language contained therein, we are unable to hold that the decision will support the contention of the department in the present case because the terms of the disposition in the present case are different.

18. Great stress was laid by Mr. Rangaswami on the provisions contained in the document in question, namely, that the settlors will enjoy the income from the properties and they will not alienate or encumber the property. The learned counsel at one stage of his argument sought to correlate this provision to Section 2(xxiv)(d) of the Gift-tax Act, 1958, which is, in so far as it is relevant, as follows :

' 'transfer of property' means any disposition, conveyance, assignment, settlement, delivery, payment or other alienation of property and, without limiting the generality of the foregoing, includes--..... (d) any transaction entered into by any person with intent thereby to diminish directly or indirectly the value of his own property and to increase the value of the property of any other person.'

19. We are of the opinion that this argument is without substance for more than one reason. In the first place, Section 2(xxiv) of the Act deals with the meaning of the expression 'transfer of property' wherever thatexpression is used in this statute and that is clear from the opening portion of Section 2. Sub-section (xxii) of Section 2 defines 'property' separately and Sub-section (xxiv) of Section 2 defines the expression 'transfer of property'. Consequently, the provision will apply only for construing the expression 'transfer of property' occurring in any particular Section of the Act, and in this case our attention has not been drawn to any provision in the Act relevant to the discussion in question containing the expression 'transfer of property' so that we can construe that expression in the light of the definition in Section 2(xxiv)(d) of the Act and hold that the document in question constitutes a gift. Secondly, Section 2(xxiv)(d) itself shows that it must be a transaction entered into by a person with intent to diminish directly or indirectly the value of his own property and to increase the value of the property of any other person. That assumes that there must be properties belonging to two persons and one of them should enter into a transaction so as to diminish the value of his property with the consequence of enhancing or increasing the value of another man's property. That is not the situation in the present case, and, therefore, Section 2(xxiv)(d) of the Act is not of any assistance. We asked the learned counsel himself to produce any authority to show that from the mere provision contained in a document under which the executant has imposed a restriction of his power of alienation, an inference can be drawn that he intended to create an interest in praesenti in favour of the settlee as in the present case. The learned counsel, after taking time, frankly admitted that he was not able to lay his fingers on any authority laying down any such principle. On the other hand, as we shall show later, even though such a provision may be indicative of the position that the transaction is a settlement rather than a will, that will not conclude the question and it is not unusual to find such a provision even in a will. Therefore, simply because a document purports to reserve life interest in the property to the donor, it cannot be an argument against its being a will, because the principal test to be applied is whether the disposition takes effect during the lifetime of the executant or whether it takes effect after his demise.

20. We shall now refer to certain decisions cited on behalf of the respon-dent-assessee. The principal decision is that of the Judicial Committee of the Privy Council in Thakur Ishri Singh v. Thakur Baldeo Singh ILR [1884] Cal 792. The document in that case was as follows :

'Whereas--I hold and enjoy possession of my estate situate in the Sitapur District, of which the Government revenue is about Rs. 16,000 I, while in the enjoyment of sound health and mind, without reluctance or coercion, assign (tamlik) the said property to my younger brother, Baldeo Singh, subject to the following condition :--

(1) That during my lifetime, I shall hold and enjoy possession of it; and that after my death my aforesaid brother, Baldeo Singh shall hold and enjoy the same like myself ;

(2) That whereas I am childless, should a legitimate and self begotten child be born to me, it shall become the owner of one-half of the estate, and Baldeo Singh shall be the owner of the other half;

(3) That after my death, Baldeo Singh shall be bound, like myself, to maintain and take care of my wife. Hence, I have written out these few words in the way of a deed of assignment (tamliknama) so that it may witness in future. Dated 28th June 1871.'

21. The nature of this document came up for consideration before the Judicial Committee which held that the transaction in question was a will. The Judicial Committee observed as follows (page 800):

'The reasons for considering it to be a will are these : It answers the definition of a will which is contained in setion 2 of Act 1 of 1869. It was registered as a will; and though that may have been done at the instance of the Registrar, it certainly was done with the full knowledge and assent of Maharaj Singh. It provides for contingencies which are not ascertain-able, or may not be ascertained, until the death of the testator: for instance, the contingency of his having a child, which he had not at the time of the will, and the contingency of his leaving a widow surviving him. It does not purport to give to anybody any possessory or present interest until the death of Maharaj, the donor. And it makes a gift to the children of Maharaj, which, if it be a deed of transfer operating at once, cannot take effect, because no child was in existence; whereas, if it is a will, the gift may perfectly well take effect. All those are very strong indicia of a testamentary character; and the question is whether they are over-borne by evidence tending in the opposite direction.'

22. The Judicial Committee ultimately held that there were no such overbearing evidence tending in the opposite direction and, therefore, the document in question was only a will.

23. The principle applicable has been laid down by a Bench of the Calcutta High Court in Sagar Chandra Mandal v. Dwarka Nath Mandal [1909] 3 IC 380 , In that case the Calcutta High Court pointed out that, if an instrument is on the face of it of a testamentary character, the mere circumstance that the testator calls it irrevocable, does not alter its quality. It is also further pointed out that the principal test to be applied is, whether the disposition made takes effect during the lifetime of the executant of the deed or whether it takes effect after his death, and if it is really of the latter nature, it is ambulatory and revocable during his lifetime. If once a document is construed to be a will, then any provision the testator has made therein that he will not be at liberty to sell the property absolutelywould be a restraint upon his own power of alienation and the same will be absolutely void and would not indicate any intention to make the deed irrevocable.

24. Venkatachalam Chetty v. Govindaswami Naicker AIR 1924 Mad 605 is a decision of a Bench of this court which dealt with the decision of the Judicial Committee in Thakur Ishri Singh v. Thakur Baldeo Singh ILR [1884] Cal 792 already referred to. In this case, the document stated :

'You shall yourself after my lifetime use and enjoy the two rooms built on the ground of the house Municipal No. 11.....I shall myself enjoythe rent in respect of those two rooms as long as I may be alive. You shall yourself use and enjoy after my lifetime that rent and that ground and the two rooms from son to grandson and so on in succession with power to gift, mortgage, exchange and sale. No one has any right to or interest in those rooms. To this effect is the gift deed document executed and given in respect of the aforesaid two rooms and their grounds.'

25. Thus it will be seen that the document itself was styled as a gift deed. Notwithstanding that, this court held that the document contained only a testamentary disposition. Dealing with an argument similar to the one advanced before us, namely, that the provision contained in the document reserving a life interest in the property to the donor is indicative of the transaction being a gift, the court observed as follows :

'The fact that the document purports to reserve a life interest in the property to the donor is an argument against its being a will, but as was pointed out by the Privy Council in Thakur Ishri Singh v. Thakur Baldeo Singh ILR [1884] Cal 792 no great attention need be paid to that, because it is a frequent thing in this country to find documents which are in fact wills in terms making clear that the person disposing of the property reserves a life or immediate interest in the property.'

26. After referring to the fact that the various things to consider in arriving at a decision as to whether a document is a will or a gift are discussed in that judgment at page 606, the Bench of this court proceeded to observe as follows:

'The document before their Lordships was very different to this, but there were certain matters in common between the two which were relied upon by their Lordships, and, in particular, the fact that the document in that case did not purport to give to anybody any possessory or present interest until the death of the donor. A clear instance of a document which should be held to be a gift or a deed of settlement, and not a will, is to be found in the case of Rajammal v. Authiammal ILR [1909] Mad 304, where the donor gave to his wife and daughter-in-law the latter of whom was claiming maintenance, some property and provided that that property during his lifetime should be held by the donees for him, that they shouldreceive Rs. 5 per month until his death, and that after his death they should have the property absolutely. It was held that that was a deed of gift and not a will. We have to consider the proper interpretation of this document and I have come to the conclusion that it is really a will and not a deed of gift and mainly base that view on the fact that the donee gets nothing until the death of the donor.'

27. Following the above judgment we must hold that in the present case also the document is only a will and not a gift because the donees get nothing until the death of the donors.

28. As we pointed out already, Mr. A. N. Rangaswami contended that there is a grant of life interest in favour of the second settlor, the wife of the first settlor, and we have already pointed out that that did not constitute any disposition in praesenti since the. first clause of the document stated that both the settlors will continue to enjoy as before showing thereby that it merely gave expression to what actually was the position then prevailing. However, this court has taken the same view in a reported decision in Damodara Moothan v. Ammit Amma AIR 1944 Mad 22. The relevant recital contained in the document in that case was as follows :

'It is settled, however, that till the end of my life and that of my wife, we ourselves should keep in possession and enjoy the properties in any manner we like.'

29. Dealing with this provision, this court observed as follows:

'I do not think that the testator meant anything more than that his daughter should not come into possession of the property as long as his widow was alive. The reference to enjoyment by himself and his wife was a reference to a natural state of affairs, wherein the wife, equally with the husband, enjoys the income from the husband's .property. This recital was intended to emphasise the fact that after the death of one of them, the other should continue to enjoy the property.'

30. If we may say so with respect, the above observations clearly apply to the present case also.

31. It remains to refer only to one unreported decision rendered by one of us, namely, Panchalai Ammal v. Muniraj (Second Appeals Nos. 645 and 646 of 1968--judgment dated 8th September, 1971). In that case also, a document came up for consideration as to whether it was a will or not. The document was styled as a settlement and it has been stamped and registered as a settlement and there was no power of revocation reserved in the document. Notwithstanding these features, having regard to the language of the document it was held thit it constituted only a testamentary disposition. The relevant provisions consisted of two sentences. In the first sentence, it was even stated that the property was settled and possession was given. But the subsequent statement made it clear that the settleewill have to look after the settlor during his lifetime and after his death should enjoy the property absolutely by paying the taxes due to the Government. It was held that the second sentence in the document made it absolutely clear that the settlee was to take the property only on the death of the settlor and, therefore, it constituted only a will. The judgment also referred to the decision in Rajammal v. Authiammal ILR [1909] Mad 304 referred to in the decision of this court in Venkatachalam Chetty v. Govinda-swami Naicker AIR 1924 Mad 605 and stated :

'I am of the opinion that any decision construing a document will have to be understood with reference to the language contained in the particular document, except to the extent that the decision lays down certain general principles as guidelines for construing a document. It has been repeatedly held that the description of a particular document, as a will or a settlement, is not conducive of its character. Equally, it is not unusual to have a will registered and, therefore, mere registration of a document cannot have any determining effect for the purpose of arriving at a conclusion whether it is a will or not. Similarly, since a will is, from its very nature, necessarily revocable, the absence of a clause reserving the power to revoke it will not make the transaction which is otherwise a will, not to be a will nor the reservation of a power of revocation, will render a transaction testamentary, if in its language and from other circumstances, it is not a will. Therefore, none of these circumstances taken separately or together, will have any decisive effect in determining the character of a document, which ultimately has to be determined solely on the basis of the language employed therein and the intention of the author of the document to be gathered from the language so employed.....

Notwithstanding the description of the document as a deed of settlement, the recital that possession was given on the date of the execution, the dispositive clause which controls and governs the first sentence, leads to the only conclusion, namely, that the transaction embodied in exhibit A-4 was only a will and not a settlement.'

32. We are of the opinion that the above extract represents the correct legal position and applying the above principles to the document we are considering, we have no hesitation in holding that the document in the present case does not constitute a settlement or gift because there is no provision in the document transferring any interest in the immovable property in praesenti in favour of any of the settlees. Under those circumstances, we agree with the conclusion of the Tribunal on the nature of the disposition contained in the document, and, accordingly, we answer the question referred to us in the affirmative and in favour of the assessee. The assessee will be entitled to his costs of this reference, and the counsel's fee is fixed at Rs. 500.


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