Oak, C.J. - (1.) THE question for consideration in this gift tax reference is whether conversion of self-acquired property into joint family property constitutes a 'gift' under the Gift Tax Act, 1958, hereafter referred to as the Act Sri Jagdish Saran is the assessee. He carried on contract business and some brick kiln business at Saharanpur. Till the assessment year 1957-58 he was assessed as an individual. He possessed certain self-acquired property. In his account books there was an entry dated 31-3-1957 to the effect that in future the business of brick kiln would be the property of himself and his sons, that is to say, the Hindu undivided family. It was also noted that the money invested in the brick kiln to the extent of Rs. 69,174/14/3, shall be the property of the joint family from that date. On 2-4-57 an agreement was entered into between Sri Jagdish Saran, his sons and his wife. It was stated in the agreement that the family shall carry on the business of brick kiln and income arising therefrom shall be exclusive property of the joint Hindu family. THE Gift Tax Officer took the view that this transaction constituted a gift, Sri Jagdish Saran was, therefore, assessed to gift tax. This view was upheld in appeal by the Appellate Assistant Commissioner. But the assessee succeeded before the Appellate Tribunal. THE Tribunal held that there was no gift involved in the transaction. THE appeal was allowed; and assessment of gift tax was cancelled.
(2.) AT the request of the Commissioner of Gift Tax, Lucknow the Appellate Tribunal has referred the following question of law to this Court:-- "Whether on the facts and in the circumstances of the case, conversion of the self-acquired property into joint family property amounted to a transfer so as to come within the scope of the definition of gift under Section 2 (xii) of the Gift Tax Act?" Mr. Banarsi Das appearing for the assessee contended before us that the property in question was joint family property even before 31-3-1967. We find from the appellate order of the Tribunal dated 29-6-1962 that it was the assessee's contention that his self-acquired property had been converted into joint family property. The Tribunal's conclusion was: "We are, therefore, of the opinion that the transaction in question by which the assessee impressed upon his self-acquired property the character of the joint family property, did not constitute in law a transfer and a gift." It means that according to the Tribunal's finding, the property involved was the self-acquired property of the assessee. It was on that footing that the question of law has been referred to the Court. We cannot, therefore, permit the assessee to take up the position that the property involved was joint family property even before 31-3-1957. We have merely to investigate the effect of conversion of self-acquired property into joint family property. In R. Subramania Iyer v. Commr. of Income Tax, Madras, 28 ITR 352 = (AIR 1955 Mad 623), it was pointed out by Madras High Court that no formalities are necessary in order to impress upon self-acquired property the character of joint family property.
(3.) IN Commr. of INcome Tax Gujarat v. Keshav Lal Lallubhai Patel, AIR 1965 SC 866 it was held that partition of joint Hindu family property is not a transfer in the strict sense. That question came before the Supreme Court in a reference under the INcome Tax Act. The connected question whether the act of throwing self-acquired property into the hotch-pot is a transfer or not was left, open. In Commr. of Gift Tax, Madras v. N. S. Getti Chettiar, (1965) 60 ITR 454 (Mad), there was a partition between members of a Hindu joint family. One member agreed to accept a share much less than his due share in the joint family property. It was held that the transaction did not amount to a gift, as it did not involve a transfer of property. In the present case we are not concerned with any partition of joint family property.;