9911796707
TMI Blog1984 (6) TMI 124X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee's objection that no taxable gift is involved. He had, however, allowed Rs. 20,000 as claims of sons against donor for services rendered by them. The assessee had filed appeal before the AAC and this was pending, Meanwhile, the Commissioner of Income-tax acting under his powers under section 24(2) of the Gift-tax Act, 1958 ('the Act') was of the view that the allowance of Rs. 20,000 was prima facie wrong on the ground that the services so rendered were not amenable for proper and certain valuation in money or monies' worth. It was for this reason that he considered the order erroneous and prejudicial to the interests of the revenue. However, he did not enhance the assessment but only set aside the same by his order dated 4-3-1981 wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , he did not deal with this aspect of the question also but had merely dismissed the assessee's appeal in toto. However, he had given his opinion that the assessee could contest the matter before the Tribunal. The assessee is, therefore, in second appeal. 5. In second appeal, the learned counsel points out that the first appellate authority was mistaken in what he did. The original assessment having been only set aside, the first assessment was entirely before him. As for merits he reiterated the consistent claim that it was only a family arrangement. He pointed out to the letters addressed to the Tehsildar and Municipal Commissioner wherein the assessee had clearly stated the circumstances under which the arrangement was made. According ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e reasons stated by the Commissioner that this could not be evaluated in money or monies' worth. Even otherwise, he argued that they were young and that the amount, if at all, could only be negligible. 7. We have carefully considered the records as well as the arguments. It is the assessee's case that he was going on Haj pilgrimage just before settlement. He has two sons and four daughters. All the daughters were married it the relevant time. One son was also married by this time. Both sons did not have higher education. Even in their teens they joined the assessee's business. No remuneration was specified or claimed. But there was always an understanding that they should be compensated. The assessee's wife was a T.B. patient for a long t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rrangement is based on the assumption that there is an antecedent title on the part of the parties and the arrangement merely acknowledges and defines what that title is. This decision, it was pointed out, has been relied upon by the Madras High Court in the case of CGT v. Pappathi Anni [1981] 127 ITR 655 which held that even where property rights were assigned to a party who did not have a share in the same, there was no element of gift in such a family arrangement between the parties because the bona fide belief that there was right constituted adequate consideration and took it out of the gift-tax liability. It was this reason that this Tribunal in the case allowed the assessee's claim that there was no gift. But having accepted the lega ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... neration for services rendered by them to the assessee in his business and that to this extent, there has been consideration. We have first to ascertain whether there is such a right. We should imagine that unlike Hindu families where the sons may be expected to assist the father without any specific remuneration because they already have pre-existing right in family business conducted by the father, there is no such obligation or expectation on the part of the assessee's sons since they are not Hindus. In fact, the revenue itself had not seriously disputed that they had such right to be remunerated. The ITO in the original assessment had recognised such right and he valued the same at Rs. 20,000. The Commissioner has interfered with his or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cognition of the legal right of the sons to the remuneration or the father's obligation to remunerate them. It may be that in view of the close relationship, they had not chosen to stipulate the salary or had no intention to treat the matter in legal terms. But that does not mean that the sons had no right. We have to find that they had such right to receive remuneration for services rendered. The fact that their services had been specifically mentioned in the letters written by the assessee prior to his departure on Haj pilgrimage clearly suggested that it was certainly a matter which weighted with the assessee. He had categorically stated even as noticed earlier 'both the sons have co-operated with me and lent their might in the managemen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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