Decided on July 29,1994



B.L.CHHIBBER, A.M. : - (1.) THIS appeal by the Revenue is directed against the order of the CGT(A), Rajkot.
(2.) The assessee is an individual assessed to income-tax and wealth-tax by the Assessing Officer, Ward 2, Jamnagar. The assessee filed return of gift on 4th July, 1985 declaring chargeable gift of Rs. 25,000 for asst. yr. 1985-86. The learned GTO noted that the assessee had, during the year under appeal, transferred 1252 equity shares of M/s. New Bharat Engineering Works Ltd., Jamnagar and a plot of land measuring 12510 sq. ft. to his family members. The assessee explained before the learned GTO that the plot of land and 1252 equity shares were transferred to the various members of the family as per family settlement deed dt. 11th February, 1985. The assessee further contended that since the aforesaid assets were transferred under bona fide settlement deed arrived at among the different members of the family, the provisions of GT Act, 1958 were not applicable in this regard. In support of his contention, reliance was placed on the judgment of Hon'ble Gauhati High Court in the case of Ziauddin Ahmed vs. CGT 1976 CTR (Gau) 161 : (1976) 102 ITR 253 (Gau) and the judgment of Hon'ble Madras High Court in the case of CGT vs. Pappathi Anni (1981) 127 ITR 655 (Mad). The learned GTO was not satisfied with the explanation furnished and held that the above noted two assets had been transferred by the assessee without any consideration and, hence, constituted gift. He noted that "on the basis of the information given by the assessee, the value per share comes to Rs. 174". Accordingly he valued 1252 equity shares at Rs. 2,17,848. The learned GTO then proceeded to work out the value of the plot of land measuring 12510 sq. ft. He noted that the immovable property was situated in Patel Colony, Near Kasturba Vikas Grah, where fast development had taken place. He noted that it was one of the best area considered to be in Jamnagar and the market value even before 1984 was not less than Rs. 100 per sq. ft. Since the arrangement had been made on 11th February, 1985 regarding the passing over of the little over the land, he valued the property at Rs. 10,00,800 at the rate of Rs. 80 per sq. ft. Thus, he computed the value of taxable gift of Rs. 12,38,650 as against the declared value of Rs. 20,000. On appeal, the learned CGT(A) held that the assessee had executed deed of family arrangement on stamp paper of Rs. 30 on 11th February, 1985 and according to this deed of family arrangement the conveyancing in respect of immovable property had taken place and accordingly the assessee was not liable to gift-tax in respect of the transfer of above noted two assets. In support of his finding, he relied upon the aforesaid two judgments in the case of Ziauddin Ahmed vs. CGT and CGT vs. Pappathi Anni (supra).
(3.) SHRI A. K. Hajala, the learned Departmental Representative submitted that there was no justification on the part of the CGT(A) for deleting the additions of Rs. 2,17,848 and 10,00,80. He submitted that the family settlement entered into among the various members of the family of the assessee was not a bona fide one and in any case did not absolve the assessee of the charge of gift. In support of his contention he relied upon the order of the Tribunal Hyderabad 'A' Bench in the case of Smt. Krovvidi Subbalakshmi vs. GTO (1987) 29 TTJ (Hyd) 319 : (1987) 22 ITD 235 (Hyd) wherein it has been held that there could be no dispute about self-acquired properties and, therefore, there could be no family settlement in respect of assessee's share in such properties after the Hindu Succession Act came into operation. The learned Departmental Representative submitted that there was no dispute among the different members of the family of the assessee; the properties transferred by the assessee were self-acquired and, hence, the assessee was liable to pay gift-tax on such transfer of assets. The learned Departmental Representative further submitted that Hon'ble Gauhati High Court judgment in the case of Ziauddin Ahmed (supra) is not applicable to the facts of the present case as in that case the assessee belonged to the Muslim community who had children from different wives "not having good relations and there were family quarrels". When the matter took serious turn in 1959, certain family arrangements were devised as a result of which certain shares were transferred by the assessee and his children to other children. The learned Departmental Representative submitted that it was under these circumstances and peculiar background that the Gauhati High Court held that it was a bona fide family arrangement; but in the case before us there was no real dispute among the various members of the family. The learned Departmental Representative further submitted that reliance placed on the decision of Madras High Court in the case of Pappathi Anni (supra) is misplaced because the facts are distinguishable. That was a case where ancestral property was involved and the dispute was between the mother and the son and when the document was entered into, both parties genuinely and bona fide thought that the son had a right to a half share in the properties left by his father and it was on this that the document was executed and hence, it was held that there was not gift liable to gift-tax because the allotment of property to the son was not without consideration. In the case of the assessee, the learned Departmental Representative submitted, there was no consideration whatsoever and, hence, the CGT(A) erredd in relying upon the aforesaid decision of the Madras High Court.;

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