1983 (3) TMI 120 - AT - Income Tax

Issues Involved:
1. Validity of the gift made under the deed dated 2-4-1955.
2. The power of disposition of Smt. Chandravathi over the property.
3. The applicability of Hindu law principles concerning the rights of an unborn son.
4. The impact of adverse possession and prescription on the title of the property.
5. The validity of the revised assessment by the GTO.

Detailed Analysis:

1. Validity of the Gift Made Under the Deed Dated 2-4-1955:
The primary issue revolves around whether the gift made by Shri Vishwanadharaju to his wife Smt. Chandravathi on 2-4-1955 was valid. The Tribunal considered the fact that the first son, R. Venkataramaraju, was conceived by the date of the gift. According to Hindu law, a son conceived but not yet born has rights similar to a born son. Thus, Shri Vishwanadharaju was not the sole surviving coparcener and could not unilaterally gift ancestral immovable property. The Tribunal referenced the Supreme Court's decision in Ammathayee alias Perumalakkal v. Kumaresan alias Balakrishnan, which held that a husband cannot gift ancestral immovable property to his wife out of affection. Therefore, the gift made on 2-4-1955 was deemed void.

2. Power of Disposition of Smt. Chandravathi Over the Property:
The Tribunal examined whether Smt. Chandravathi had the right to dispose of the property under the settlement deed dated 31-5-1970. The deed dated 2-4-1955 conferred only a life estate to Smt. Chandravathi without powers of alienation. The Tribunal found that she could not convey absolute rights in the property to her sons, as she did not possess such rights herself. The Tribunal emphasized that she could not enjoy more rights than those conferred under the original deed.

3. Applicability of Hindu Law Principles Concerning the Rights of an Unborn Son:
The Tribunal addressed the argument that the rights of an unborn son, under Hindu law, should not be considered in the context of the Gift-tax Act. The Tribunal disagreed, stating that the purpose was to determine the rights acquired by Smt. Chandravathi under the general Hindu law. The Tribunal cited the Supreme Court's decision in T.S. Srinivasan v. CIT, which acknowledged the rights of a son conceived but not yet born in matters of inheritance and property rights. Thus, the Tribunal held that the rights of the unborn son, R. Venkataramaraju, invalidated the gift made on 2-4-1955.

4. Impact of Adverse Possession and Prescription on the Title of the Property:
The Tribunal considered the argument that Smt. Chandravathi had acquired title by adverse possession, having enjoyed the property exclusively for over 12 years. However, the Tribunal found no evidence to support that she had abandoned her rights under the original deed and began prescribing absolute rights. Therefore, the claim of adverse possession did not hold.

5. Validity of the Revised Assessment by the GTO:
The Tribunal reviewed the revised assessment by the GTO, who treated Smt. Chandravathi as the absolute owner of the gifted land and computed the value of the gift accordingly. The Tribunal found that the GTO failed to determine whether Smt. Chandravathi derived any rights under the deed dated 2-4-1955. Since the original gift was void, the subsequent gift dated 31-5-1970 could not convey any valid interest. Consequently, the Tribunal upheld the AAC's decision to cancel the gift-tax assessment.

Conclusion:
The Tribunal concluded that the gift made by Shri Vishwanadharaju on 2-4-1955 was void under Hindu law, as he was not the sole surviving coparcener at the time. Smt. Chandravathi, having only a life estate without powers of alienation, could not convey absolute rights in the property. The Tribunal dismissed the revenue's appeal, upholding the cancellation of the gift-tax assessment.

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