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1967 (1) TMI 36 - HC - Income TaxWhether Tribunal was right in holding that the amount inherited by Ghasiram Agarwalla from his deceased father was his absolute property - Whether, on the division of the aforesaid amount between Ghasiram Agarwalla and his three sons, there was a gift by Ghasiram Agarwalla to his three sons which was assessable to gift-tax
Issues:
1. Whether the amount inherited under the Hindu Succession Act was absolute property. 2. Whether the division of the inherited amount among family members constituted a taxable gift. Analysis: The case involved the inheritance of an amount by Ghasiram Agarwalla from his deceased father, Sagarmal Agarwalla, under the Hindu Succession Act, 1956. The income tax authorities contended that the entire amount inherited by Ghasiram was his absolute property, and the subsequent division of a portion of it among his three sons constituted a taxable gift. The Appellate Assistant Commissioner and the Income-tax Appellate Tribunal upheld this view, leading to a reference to the High Court. The High Court examined the facts of the case, which revealed that there was a partial partition in the Hindu undivided family, resulting in the formation of a partnership firm involving Sagarmal Agarwalla, Ghasiram Agarwalla, and Ghasiram's three sons. After Sagarmal's death, the amount in question was divided among Ghasiram and his sons. The Gift-tax Officer considered this division as a gift by Ghasiram to his sons, subject to gift tax. The High Court analyzed the provisions of the Hindu Succession Act and relevant legal principles. It was established that the separate property of a Hindu devolves as self-acquired property on his heirs and does not pass by survivorship. The court emphasized that even before the enactment of the Hindu Succession Act, separate property devolved on the heirs of the individual. Therefore, the court concluded that the amount inherited by Ghasiram was his self-acquired property, affirming the decisions of the lower authorities. In light of the findings, the High Court answered both questions in the affirmative, confirming that the inherited amount was Ghasiram's absolute property and the division among his sons constituted a taxable gift. The court declined to make any order regarding costs, and the reference was answered accordingly.
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