1989 (3) TMI 53 - HC - Wealth-tax

Summary

Issues:
1. Interpretation of the terms of a gift by a father to his son regarding the treatment of income from gifted properties under the Income-tax Act.
2. Determining whether a sum of money belonged to a Hindu undivided family or an individual under the Wealth-tax Act.

Analysis:
Issue 1:
The case involved conflicting views on whether income from gifted properties should be treated as belonging to a Hindu undivided family or the individual assessee under the Income-tax Act. The father gifted a sum of money to his son, directing that the benefit should go to the son's wife and children as a Hindu joint family. The terms of the gift explicitly stated that the sums and accretions should be subject to the incidence of joint family property under Hindu law. The Income Tax Appellate Tribunal accepted the stand of the assessee, leading to the reference of the case to the Full Bench.

Issue 2:
The second issue pertained to the Wealth-tax Act and whether a sum of money rightfully belonged to a Hindu undivided family or the individual assessee. The Division Bench considered the intention of the donor as a primary rule in determining the character of the gifted property. Two previous Division Bench judgments highlighted the importance of the donor's intention in cases of gifts or wills. The court emphasized that if there are express provisions in the deed of gift or will indicating that the property is intended for the benefit of the family, that should be decisive in determining the status of the assessee.

Conclusion:
The Full Bench approved the view that the primary rule of intention by the donor should be applied in cases involving gifts of properties. They distinguished a previous Supreme Court judgment where the assessee had declared the property as joint family property, emphasizing the importance of the donor's intention. The court ruled in favor of the assessee, stating that the Tribunal had correctly accepted the case based on the donor's intention. The judgments in favor of the assessee in both tax cases were upheld, and the questions were answered against the Revenue.