1984 (6) TMI 124 - AT - Income Tax

Summary

Issues:
- Appeal against gift-tax assessment for the assessment year 1972-73.
- Dispute over taxable gift involving settlement of properties to wife and sons.
- Commissioner's order setting aside the assessment for re-evaluation.
- Second assessment by GTO rejecting claim of family arrangement and remuneration to sons.
- Competency of first appellate authority to deal with the second assessment.
- Claim of family arrangement by the assessee.
- Claim of remuneration to sons for services rendered.
- Evaluation of the legal right of sons to remuneration.
- Determination of reasonable remuneration for sons' services.

Analysis:

The appeal pertained to a gift-tax assessment for the year 1972-73, where the assessee had settled properties to his wife and sons, leading to a dispute over the taxable gift amount. The Commissioner set aside the initial assessment due to concerns over the valuation of services rendered by sons and directed a re-evaluation. The subsequent assessment by the GTO rejected the claim of a family arrangement and remuneration to sons, leading to the second appeal.

The first appellate authority considered himself incompetent to deal with the second assessment, citing the Commissioner's finding as binding. The assessee claimed a family arrangement, stating that the sons' services were compensated and not a gift. The departmental representative argued against the claim, stating the properties were owned by the assessee prior to sons' involvement, and no prior right or claim was established by sons.

The Tribunal analyzed the facts, emphasizing the absence of evidence supporting a family arrangement claim. The legal position on family arrangements and gift-tax liability was discussed, highlighting the need for an element of bounty for a deemed gift. The Tribunal rejected the family arrangement claim due to the lack of factual foundation.

Regarding the claim of remuneration to sons for services rendered, the Tribunal acknowledged the legal right of sons to be remunerated. It emphasized the sons' services and the obligation of the father to compensate them. The Tribunal determined a reasonable remuneration for the sons' services, considering their ages and the period of work, resulting in a partial allowance of the appeal.

In conclusion, the Tribunal upheld the legal right of sons to remuneration for services rendered, adjusting the deduction amount to reflect a reasonable remuneration, and allowed the appeal partially based on this evaluation.