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TMI Blog2007 (8) TMI 378X X X X Extracts X X X X X X X X Extracts X X X X ..... the settlement deed, the AO issued notice under s. 16(1) of the GT Act and in response to the said notice, the assessee filed return of gift declaring taxable gift at nil. It appears that subsequently the assessee executed another deed dt. 8th Feb., 2003 and as per the contention of the assessee there was a mistake with respect of the total area of land transferred to his wife as a licencee for the construction of the residential house and hence the correct area of the land to be transferred as per the new deed of rectification dt. 8th Jan., 2003. As per the original deed of settlement dt. 7th Oct., 1997, the assessee has transferred 33 cents of land but as per the rectification deed it was shown that the assessee transferred 6.155 cents of land to his wife. The assessee taken the contention before the AO that as the donor kept the right of enjoyment of the property for himself and his two children, there is no absolute transfer as the assessee was enjoying the property. The AO rejected the contention of the assessee that only 6.155 cents of land was transferred and as per the AO the assessee executed second deed only after the initiation of the gift-tax proceedings. In the opinion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Baby Ammal v. Rajan Ashari 1997 (1) KLT 340 (SC). The assessee also contended that there was no transfer of 33 cents of land in favour of his wife though the same was mentioned in the settlement deed dt. 7th Oct., 1997 but in fact the assessee has only transferred 6.155 cents of land. It was further contended that wife has to construct residential house in the said property with her own funds and the assessee had retained the right of enjoyment during his lifetime and also during the lifetime of two sons and hence there is no absolute transfer of the property within the meaning of s. 122 of the Transfer of Property Act and there was no power to the wife to dispose of the property. The CIT(A) negativated the contention of the assessee and held that the property settled by the assessee vide deed of settlement dt. 7th Oct., 1997 is a gift in praesenti and further held that the assessee has transferred the property of 33 cents of land by deed of settlement to his wife and this is a clear transfer without adequate consideration attracting the provisions of GT Act. Now the assessee is in appeal before us on this particular issue. 4. We have heard Shri C.B.M. Warrier, the learned ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed mistake. In our opinion, the deed of rectification dt. 8th Jan., 2003 is an afterthought. So we concur with the finding that the property transferred vide deed of settlement dt. 7th Oct., 1997 is only to be considered. 6. Now the next issue is whether the transfer of 33 cents of land vide deed of settlement dt. 7th Oct., 1997 amounts to deemed gift within the meaning of s. 4(1)(d) of the GT Act. Sec. 4(1)(d) of the GT Act reads as under : "Where a person absolutely entitled to property causes or has caused the same to be vested whatever manner in himself and any other person jointly without adequate consideration and such other person makes an appropriation from or out of the said property, the amount of the appropriation used for the benefit of the person making the appropriation or for the benefit of any other person shall be deemed to be a gift made in his favour by the person who causes or has caused the property to be so vested." It is the mandate of the said provision that— (a) the person should be absolutely entitled to the property; (b) he has vested his property jointly in himself and in any other person; (c) without adequate consideration; and (d) such ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the schedule property to you to hold and enjoy the same as its absolute owner paying the land tax to the Government. I covenant that the property is free of all encumbrances, charges, alienations, mortgages, indemnities, Court attachment and equitable mortgages etc." It is clear from the terms of the settlement that the assessee has retained the right of enjoyment in the property for his life and also retained the same right in favour of the children, viz. Anila Mathew and Jayanth Mathew for their residence in the building which the assessee's wife was going to construct. We find force in the argument of the learned chartered accountant that the alleged donee or assessee's wife has constructed residential building in which the assessee has retained the right for enjoyment during his lifetime and that is a sufficient adequate consideration which is contemplated under s. 4(1)(a) or under s. 4(1)(d) of the GT Act. The learned chartered accountant has filed copies of the statement of the total income as well as copy of the acknowledgment of the return for the asst. yr. 1998-99, which is placed on record and further submitted that Mrs. Elizabath Mathew was having 7,000 equity share ..... X X X X Extracts X X X X X X X X Extracts X X X X
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