A SEETHARAMAIAH Vs. WEALTH TAX OFFICER
INCOME TAX APPELLATE TRIBUNAL
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V. Rajagopalan, Judicial Member -
(1.) THE assessee, an individual, has filed these appeals against the identical order passed separately for the assessment years 1977-78 and 1978-79 by the Commissioner, Visakha-patnam, under Section 25(2) of the Wealth-tax Act, 1957 ('the Act').
(2.) Originally, the assessements to wealth-tax for the above assessment years were made by the WTO by orders dated 10-11-1978 under Section 16(3) of the Act by accepting the assessee's claim that certain properties received by way of gift from his paternal uncle belonged to his HUF, but not to him as individual. Later, the Commissioner initiated action under Section 25(2), for both the assessment years on the ground that the conclusion of the WTO that the aforesaid properties belonged to the HUF and not to the assessee as individual was erroneous and prejudicial to the interests of the revenue. On behalf of the assesses it was explained before the Commissioner that the assessee had received the impugned properties as gift from his paternal uncle under three deeds of gift dated 12-9-1952, 29-6-1954 and 6-9-1954, that though the assessee was described as the donee, the gifts were meant for the benefit of his family and that, therefore, the gift deeds had created an interest in favour of the HUF consisting of the assessee and his children. It was, therefore, claimed that the inclusion of the said properties in the individual assessments of the assessee was not justified. The Commissioner, however, was of the view that the recitals in the gift deeds indicated very clearly that donee was given full rights of enjoyment in the property for himself and that his progeny would also be entitled to inherit the property eventually. He further observed that the recitals in the deeds also clarified the above view by giving full rights of alienation and disposition to the assessee exclusively. He held that the intention of the donor was only to give full rights over the property to the assessee and not to create any rights in favour of the HUF of the assessee as claimed. He accordingly set aside the assessments for both the assessment years and directed the WTO to redo the same by including in the assessee's net wealth the value of the above properties received by him under the aforesaid three gift deeds. It is against these orders of the Commissioner that the assessee has filed these appeals before the Tribunal.
The learned counsel for the assessee, Shri Sreerama Rao, submitted that the assessee was gifted by his paternal uncle three vacant sites under deeds of gift dated 12-9-1952, 29-6-1954 and 6-9-1954, that at the time when the gifts were made the assessee had two sons, that for the years under appeal, due to ignorance of the correct position in law, the assessee had included the value of the above properties in the net wealth but later on coming to know the correct legal position, he had filed revised return in which it was claimed that the above properties belonged to his HUF, that the WTO, when he made the original assessments, had considered the above claim of the assessee with reference to the records of the case, that the WTO had found the claim in order and accepted the same by excluding the value of the properties from the net wealth of the assessee assessed as individual, that as per the recitals in the gift deeds the donor had intended that the properties should be enjoyed by the assessee 'putra poutra paramparya' which clearly indicated that the property should be enjoyed by the assessee and his lineal male descendants, that the intention was not to gift the properties to the assessee as an individual, that merely because powers of alienation were also conferred under the gift deeds, it cannot be said that the intention was to gift the properties to the assessee as an individual because even a HUF can alienate property subject to the limitation laid down by law and that, therefore, the Commissioner had erred in holding that the properties were gifted to the assessee as an individual.
(3.) THE learned counsel referred to the ruling of the Supreme Court in C.N. Arunachala Mudaliar v. C.A. Muruganatha Mudaliar  SCR 243 which was referred to by the Supreme Court later in its decision in the case ofM.P. Periakaruppan Chettiar v. CIT/CWT/CGT  99 ITR 1. He pointed out that the matter is one of construction of the deeds of gift and the Supreme Court in the above cases had held that the court would have to collect the intention of the donor from the language of the document taken along with the surrounding circumstances in accordance with the well-known canons of construction. He pointed out that the facts in the case before the Supreme Court in Periakaruppan (supra) were different in that the recitals in the documents were not the same is in the instant case.;
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