1980 (3) TMI 166 - AT - Income Tax

Summary

Issues:
- Validity of gift made by the assessee under s. 15(3) of the Gift Tax Act, 1958.
- Competency of the assessee to dispose of ancestral property.
- Dispute regarding settlement deeds and valuation.
- Applicability of decision in the case of Nattusami & another vs. CIT(1).
- Justification of the valuation adopted by the authorities.

Analysis:
The appeal before the Appellate Tribunal ITAT MADRAS-B involved a dispute regarding the computation of a taxable gift made by the assessee, Shri K. Subbe Gounder, at Rs. 77,000 under s. 15(3) of the Gift Tax Act, 1958. The assessee had gifted about 20 acres of land to his daughter, which was the subject of contention in this case. The assessee argued that he was not competent to make a gift of ancestral property, but the authorities overruled this objection, stating that he had absolute disposing capacity as the sole surviving coparcener. The assessee also raised concerns about the valuation of the gifts, claiming that the declared value was influenced by registering authorities. The Appellate Assistant Commissioner (AAC) rejected these arguments, finding that the assessee had the capacity to make the gift and that the valuation was correct.

The Appellate Tribunal considered the records and arguments presented. It noted that since the assessee had already partitioned his assets with his sons, he had the absolute capacity to dispose of the properties allotted to him. The Tribunal emphasized that even if the assessee did not have absolute disposing capacity, the gift to his daughter would still be valid given his substantial land holdings. The Tribunal concluded that the assessee had the right to gift the properties in question, regardless of whether the donee was his daughter alone or included her children. The Tribunal also upheld the valuation adopted by the authorities, noting that the valuation declared for registration purposes was accepted by the Gift Tax Officer (GTO) and found to be correct by the AAC. The Tribunal dismissed the appeal, affirming the validity of the gift and the valuation adopted by the authorities.

In summary, the Appellate Tribunal upheld the decision of the authorities regarding the validity of the gift made by the assessee and the valuation of the properties gifted. The Tribunal emphasized the assessee's absolute disposing capacity and the correctness of the valuation declared for registration purposes. The appeal was ultimately dismissed, confirming the assessment of the taxable gift at Rs. 77,000.