1981 (9) TMI 149 - AT - Income Tax

Summary

Issues:
Validity of partition of HUF properties claimed as gift by GTO - Applicability of Gift-tax Act, 1958 - Rights of sole coparcener in HUF properties - Claim of partition by wife and daughters - Interpretation of Hindu law on partition and property rights of female members.

Analysis:

The case involved a deed of partition dated 14-3-1972 among the assessee, his wife, and three daughters, all members of the HUF, regarding properties at two different locations. The assessee contended that it was a partition of HUF properties, not a gift. However, the GTO argued that as the sole coparcener, the assessee effectively gifted the properties to his family members, invoking the Gift-tax Act, 1958.

The Commissioner (Appeals) upheld the GTO's view, stating that the sole coparcener of an HUF is considered the property owner, precluding the possibility of partition. Despite the deed being termed a partition, it was deemed a gift to the wife and children under the Gift-tax Act.

The counsel for the assessee argued that as the family constituted the assessee, his wife, and daughters, and the properties belonged to the HUF, the partition among them was valid and not a gift. On the contrary, the departmental representative contended that as the sole coparcener, the assessee could treat the properties as self-acquired, and the female members had no partition rights, constituting a gift by the assessee.

The Tribunal noted that the assessee was the sole coparcener with no other member eligible for partition. Citing legal precedents, including V.V.S. Natarajan v. CIT and S. Sadasivam v. CAIT, it established that in such cases, where the sole coparcener allocates properties to family members, it amounts to a gift, not a partition as per Hindu law.

Relying on the Madras High Court decisions and the Supreme Court's observation in Pushpa Devi v. CIT, the Tribunal concluded that the properties given to the wife and daughters were gifts by the sole coparcener, in line with the legal principles governing HUF properties and partition rights of female members.

In light of the above analysis and legal interpretations, the Tribunal partially allowed the appeal, affirming the lower authorities' view on the nature of the partition and the applicability of the Gift-tax Act, 1958.