1998 (11) TMI 9 - HC - Income Tax

Summary

Issues:
1. Nature of the document dated 15th Sept., 1971 - Gift deed or family arrangement
2. Settlement of lands to wife and mother in lieu of maintenance - Consideration for gift tax
3. Levying of gift tax on life interest conferred to wife and mother

Analysis:

1. The case involved a document dated 15th Sept., 1971, where a life interest was created in certain lands for the wife and mother of the settlor. The question arose whether this document was a gift deed or a deed of family arrangement. The GTO considered it a gift deed, while the assessee contended it was a family arrangement. The Tribunal found that the settlement of properties for the daughters amounted to a gift, but the provision for maintenance of the second wife and mother was a creation of life interest in lieu of pre-existing right to maintenance, not a transfer without consideration.

2. The legal representatives of the deceased sought a reference on the nature of the document dated 15th Sept., 1971. However, they failed to appear before the Court, and the document was not filed along with the statement of the case. Due to the lack of representation, the reference made at the instance of the assessee was returned without recording any answer.

3. Regarding the questions referred by the Revenue, the Tribunal's interpretation was upheld. It was established that the creation of life interest in favor of the wife and mother, who were not coparceners but entitled to maintenance under Hindu Law, was not a transfer without consideration. As such, the questions referred by the Revenue were answered against them and in favor of the assessee.