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Issues Involved:
1. Applicability of Gift-tax under section 4(1) of the Gift-tax Act, 1958, on assets received by an adopted son after the adoptive mother takes Sanyas. 2. Validity of adoption under section 11 of the Hindu Adoption and Maintenance Act, 1956. Detailed Analysis: Issue 1: Applicability of Gift-tax The central issue is whether the assets inherited by the adopted son of a Jain female who took Sanyas (Diksha) are subject to Gift-tax under section 4(1) of the Gift-tax Act, 1958. The Revenue argued that Smt. Sushilabai's relinquishment of her property rights in favor of her adopted son Shri Harakchand constituted a transfer subject to Gift-tax. The G.T.O. relied on the Madras High Court decisions in His Holiness Sri La-Sri Shanmugha Desika Gnanasambanda Paramacharya Swamigal v. CED and Kondal Row v. Iswara Sanyasi to support this view. However, the Dy. CGT(A) and the Tribunal found that the property passed to Shri Harakchand due to the legal consequences of Smt. Sushilabai taking Sanyas, which is considered a civil death. This transmission of property by operation of law is not a "gift" as defined under section 2(xii) and section 2(xxiv) of the Gift-tax Act. The Tribunal emphasized that Gift-tax applies to transactions between living persons and not to transfers by operation of law, such as inheritance or civil death. Thus, the Tribunal held that there was no taxable gift, and the assessment by the G.T.O. was canceled. Issue 2: Validity of Adoption The G.T.O. contended that the adoption was invalid under section 11 of the Hindu Adoption and Maintenance Act, 1956, because the age difference between Smt. Sushilabai and Shri Harakchand was less than 21 years. However, the Dy. CGT(A) accepted additional evidence, including affidavits, horoscopes, LIC policy, and certificates that proved the age difference was indeed more than 21 years. The Tribunal upheld this finding, confirming that the adoption was valid under section 11. The Tribunal also noted that the adoption deed dated 8-6-1982 was merely a record of the adoption that took place on 3-6-1982, before Smt. Sushilabai took Sanyas on 5-6-1982. Therefore, the adopted son became the owner of the property by legal transmission upon her civil death, not by any act of gift or release by Smt. Sushilabai. Conclusion The Tribunal dismissed the Revenue's appeal, concluding that: 1. The transfer of property to the adopted son upon the adoptive mother's taking Sanyas does not attract Gift-tax because it is a transmission by operation of law, not a voluntary transfer. 2. The adoption was valid under section 11 of the Hindu Adoption and Maintenance Act, 1956, as the age difference requirement was met. In the result, the appeal was dismissed, and the assessment order by the G.T.O. was canceled.
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