1972 (9) TMI 23 - HC - Income Tax

Gift Tax - petitioners father purported to execute a settlement deed dated April 25, 1963, in their favour. Several items of properties in two different villages were given to the petitioners. This settlement was treated by the Gift-tax Officer as a gift coming within the purview of the Gift-tax Act and an order of assessment was passed after giving notice to the petitioners father as donor - Whether settlement of ancestral property by father in favour of sons is valid and whether karta of HUF has powers to make settlements

Summary

The High Court of Madras ruled in a Gift-tax Act case where a settlement deed was treated as a taxable gift. The court found that since the properties covered by the settlement deed were ancestral properties, the levy of gift-tax was not valid. The court allowed the writ petition and prohibited the Tax Recovery Officer from continuing the recovery proceedings. No costs were awarded. (Case citation: 1972 (9) TMI 23 - Madras High Court)