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TMI Blog1987 (12) TMI 83X X X X Extracts X X X X X X X X Extracts X X X X ..... dy on 25-5-1970 the terms of which would be relevant and would be subsequently referred to in this order. In pursuance of the illatom adoption, runs the case of the assessee that Smt. Ramasubbamma was given in marriage to Sri Dayakar Reddy on 2-11-1973. Smt. Suharlata the second daughter of Sri M. Adinarayana Reddy was given in marriage to Sri Y. Adisesha Reddy on 13-12-1973. It is the case of the assessee that at the time of her marriage with Sri Adisesha Reddy, her father Sri Adinarayana Reddy promised to give her 3 Acs. of wet land and 81/2 Acs. of dry land towards ' Pasupukunkuma '. 3. In 1974 one Smt. Y. Sarojanamma of Sirsanambedu village near Naidupet, Nellore District, filed a suit against Sri M. Adinarayana Reddy claiming half the share in his properties on the ground that she had lived with him from 1970 to 1973 and during that period she rendered all sorts of services to him, in consideration whereof, he promised to give her half share in his property. Sri M. Adinarayana Reddy, donor assesses, actually died on 12-9-1976. Prior to his death he settled his properties to his wife, two daughters and two sons-in-law by means of the registered Settlement Deeds dated 29-3-197 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the obligation undertaken by Sri Adinarayana Reddy under the illatom adoption agreement dated 25-5-1970. It was stated before the GTO that the illatom son-in-law is entitled to half share in the property held by his father-in-law (adopter). The original of the adoption deed dated 25-5-1970 was not filed before the GTO on the ground that the same was filed with the Land Tribunal in connection with the land ceiling proceedings pending at that time. The GTO first pouncing upon the fact of the illatom adoption agreement held that the document was executed on a plain paper and was not registered and it was executed three years prior to the marriage. The GTO also held that on verification of the concerned provisions of Hindu Law and the commentaries thereon, it is found that the illatom agreement does not give any actionable right to the illatom son-in-law. In support of this finding a passage in N.R. Raghavachari's Hindu Law Commentary was relied upon which is as follows : " By the illatom affiliation, the adopter does not deprive himself of his absolute power of disposing of his property in any way he likes, and hence the illatom son is not entitled to interdict the adopter's alienat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th. Ultimately he gave a finding that the gifts in favour of daughters are not exempt under the provisions of section 5(1)(vii) of the GT Act as according to the GTO they were not made on the occasion of the marriage. Thus, rejecting the contentions advanced on behalf of the assessee he completed the assessment, computing the taxable gifts as follows : Rs. Rs. Gifts to sons-in-law 24,572 x 2 = 49,144 Gifts to 2 married daughters 24,572 x 2 = 49,144 Gifts to wife Rs. 21,410 was exempt under section 5(1)(viii) --------------- 98,288 Less : Basic Exemption 5,000 --------------- Taxable Gift 93,288 or 93,290 --------------- Thus, the GTO computed the value of the total taxable gift at Rs. 93,290 by his asst. order dated 30-3-1981. 4. Aggrieved against the assessment order the assessee went in appeal before the AAC. He held by his impugned orders that under Hindu Law Sri Dayakar Reddy was entitled to half share of the property of Shri M. Adinarayana Reddy even during his lifetime. He relied upon the Mayne's treatise on Hindu Law and Usage, 11th Edition, Page 280, Paragraph 228. He also relied upon the AP High Court's decision in the case of Peechu Ramaiah v. Go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pasupukunkuma ' to the daughter on the occasion of her marriage the same falls outside the cope of gift within the meaning of section 2(xxii) of the Gift-tax Act. Thus, be ordered exclusion of the following gifts and their values from the total value of the taxable gift computed by the GTO : Rs. 1. Sri Y. Dayakar Reddy 24,572 2. Sri Y. Ramasubbamma 24,572 3. Smt. Y. Suharlata 24,572 Thus, the AAC allowed the appeal filed before him. 6. Aggrieved against the impugned, order passed by the AAC the Department came up in second appeal before this Tribunal and thus the matter stands for our consideration. In the grounds of appeal the revenue took up the position that the AAC erred in holding that there is no element of gift in a settlement made in favour of Shri Dayakar Reddy, illatom son-in-law and Smt. Ramasubbamma, daughter. So also, the AAC erred in holding that there is no element of gift in the case of Smt. Suharlata and ultimately it was contended that ordering exclusion of Rs. 73,716 from out of the total taxable gift of Rs. 93,290 determined by the GTO is erroneous and should be set aside. 7. We have heard Shri D.S. Prasada Reddy, learned counsel for the assessee a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n continuing as one of the members of the donor family. It is stated further that apart from love and affection which he got towards his first son-in-law the fact that the first son-in-law has been looking after the properties of the donor with due care and caution was stated to be an additional factor which prompted the donor to execute the gift deed. Now we are at the point whether the gift deed in his favour is valid or not. According to us for two reasons it was valid. Firstly, because in the Land Revenue Appellate Tribunal proceedings when the matter went up to the High Court, the Hon'ble High Court in CRP No. 1630 of 1982 and 631 of 1982 by their judgment dated 11-2-1987 held that illatom adoption agreement was held to be established and that as per the terms of the agreement, Sri Dayakar Reddy was entitled to half the property of his father-in-law and therefore, the Hon'ble High Court directed that half the property as per the agreement dated 25-5-1970 should be included in the holding of Shri Y. Dayakar Reddy. In the said order of the AP High Court the lower Tribunals following the case of G. Narayanappa v. State of AP [1978] 2 APLJ 60 held that after the advent of the Hind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he AP High Court must have considered the Supreme Court's decision in Kartar Singh's case. In fact, though we studied fully [1980] 2 APLJ 333 we did not come across any reference being made to Kartar Singh's case. It is not the case of the revenue that the matter (the judgment dated 11-2-1987 in CR P 630 and 631 of 1982) was taken in further appeal either to the Full Bench or to the Supreme Court. Therefore, it must be taken to have become final and accordingly we have to hold that the illatom agreement dated 25-5-1970 was true and established and according to it half the property held by the donor must belong to the illatom son-in-law, Sri Y. Dayakar Reddy. It was never the case of the assessee that there was any partition between the father-in-law and the first son-in-law during the former's lifetime. Therefore, a fortiori, it shows that half the property is covered by the gift deed in favour of Sri Dayakar Reddy, were the own properties of Sri Dayakar Reddy. The other undivided half only belongs to the donor Sri Adinarayana Reddy. It was not the case of the revenue that the gift deed was invalid under any of the provisions of the AP Land Reforms (Ceiling on Agricultural Holdings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his wife should be considered as having been executed by the donor for adequate consideration of Shri Dayakar Reddy giving up his joint rights in all the properties held by his father-in-law Sri Adinarayana Reddy and on that ground it should not be held to be a gift at all. We find this argument difficult to accept. This was never the case put forward before any of the lower authorities. This argument is not a pure legal argument. The question of benami is always a mixed question of fact and law and for the first time ordinarily we would be averse to allow any question of fact being looked into at our stage. Therefore, we refuse to entertain this argument for the first time before us. 9. Now, let us consider the validity of the gift deeds dated 26-9-1973 in favour of Smt. Ramasubbamma and Smt, Suharlata. As far as these gift deeds are concerned, it was vehemently contended by the learned Departmental Representative that their marriages took place in 1973 whereas, the gifts were made in 1976 three long years after their marriages. The gifts were purported to have been made in pursuance of the promises made by Sri Adinarayana Reddy to give some properties to his daughters towards ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re-existing legal obligation of the father under the general Hindu Law. Therefore, it ceases to be a voluntary act nor is it to be labelled as without consideration but is one in the discharge of a pre-existing legal obligation. Therefore, it is neither an alienation nor a transfer, attracting section 2(xii) of the Gift-tax Act, but is a family settlement. " Therefore, the assessee was held not liable to pay gift-tax. 10. In this case Shri Adinarayaia Reddy was divided from his other coparceners and the whole property held by him represented ancestral property. Sri M. Adinarayana Reddy filed a declaration along with his wife claiming to be holding 14 acres 22 cents of single crop wet land and another extent of 2 acres 72 cents under one source and also 51 acres 61 cents of dry land. Sri Adinarayana Reddy was held to be having a total extent of 2.2893 standard holdings as per the Land Reforms Tribunal, Nellore, in CC Nos. 172 and 173/GDR/75 by its order dated 9-11-1979. The Land Reforms Appellate Tribunal on the other hand, determined the total extent at 2.2172 standard holdings and the legal representative of Sri Adinarayana Reddy was asked to surrender 1.217 standard holdings. W ..... X X X X Extracts X X X X X X X X Extracts X X X X
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