1982 (7) TMI 158 - AT - Income Tax

Summary

Issues:
1. Whether the relinquishment of the undivided share in the HUF properties by the assessee amounted to a taxable gift under the Gift-tax Act.
2. Whether the assessee had possession of her interest in the HUF property when the Hindu Succession Act came into force.

Analysis:

Issue 1:
The assessee's husband died in 1949, leaving behind his widow, the assessee, and a son. The assessee relinquished her interest in the HUF properties, leading to gift-tax proceedings initiated by the ITO. The Commissioner (Appeals) upheld the assessment to gift-tax, stating that the assessee was the full owner of her 50% share in the HUF properties and had the right to claim partition. The Tribunal held that the assessee had become the full owner of half the property after the Hindu Succession Act came into force, and the relinquishment of her interest constituted a taxable gift, affirming the Commissioner's decision.

Issue 2:
The question arose whether the assessee had possession of her interest in the HUF property when the Hindu Succession Act was enacted. The Tribunal referred to the provisions of the Hindu Women's Right to Property Act, stating that the widow's estate was abolished under the Hindu Succession Act, and any property possessed by a female Hindu would be held by her as a full owner. The Tribunal rejected the argument that without a partition, a member of the HUF cannot claim possession of their share, emphasizing that every member of the HUF can claim possession and alienate their undivided interest. The Tribunal distinguished the Gujarat High Court ruling cited by the assessee and relied on the Supreme Court decision in a similar case to conclude that the assessee had possession of her share and the relinquishment constituted a taxable gift.

In conclusion, the Tribunal dismissed the appeal, affirming that the relinquishment of the assessee's share in the HUF properties amounted to a taxable gift under the Gift-tax Act, and the assessee had possession of her interest in the property when the Hindu Succession Act came into force.