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TMI Blog1978 (9) TMI 117X X X X Extracts X X X X X X X X Extracts X X X X ..... any of the liabilities nor is there any discussion in the order about the break-up of the value of Rs. 1,60,000. There appears to have been a delay of one year in the service of this order, the same having been served only on 8th April, 1975. At this stage, to complete the record it may, be stated that in the income-tax as well as the wealth tax returns from 1973-74 filed on 12th March, 1974 and 29th Nov., 1973 respectively, the income from, and the value of the said property was excluded and the assessments were completed on the basis of the returns filed. It was only later subsequent to execution of the deed of Revocation that the assessee filed returns styled "revised returns" including therein the income as well as the wealth relating to the asset in respect of which settlement was revoked. 3. The assessee appealed to the AAC and the main contention before him in the grounds as originally filed was that the GTO erred in not allowing as deduction the liabilities claimed as well as a specific deduction of Rs. 25,000 under s. 5(1) (xii) representing provision for higher education expenses of children. There was a mention that the assessee sought permission to submit additional g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ession of the schedule premises. 8. The value of the premises for purposes of stamp duty is Rs. 70,000 (Rupees Seventy thousand only). Schedule of the Premises settled. All that piece and parcel of land together with the buildings and outhouses and compound walls standing therein bearing Municipal Door No. 3, Pachiappas Hostel Road, Egmore, Madras and comprised in R.S. No. 374/24 and measuring 54 feet broad on the North and South 130 feet long on the East and 161 feet long on the West and measuring three grounds or thereabouts, bounded on the North by Bungalow known as "South Hatch" in R.S. No. 372 on the East by the property of A. Vedachala Mudaliar in another part of R.S. No. 374 on the South by the Pachiappa Hostel Road, and on the West by the site sold to N.R. Rajagopalachari and situate in the Registration sub-district of West Madras in the Registration District of Madras. In witness whereof the Settlor has affixed her hands and seals this day of August one thousand nine hundred and seventy two in the presence of. SD. PADMA SRINIVASAN "SETTLOR" The submission was that notwithstanding the execution and registration of the aforesaid Deed of Settlement, Shri Mohan Srinivas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Sudersan Chit funds, Cavalry Road, Bangalore, in Jan., 1972 by way of collateral security for due repayment of the loan taken by me from them, under a chit valued Rs. 50,000 in which I joined as subscriber in 1971. Whereas the said documents of title are still with the said chit fund upto this date, as the loan has not yet been fully discharged. Whereas the original deed of settlement dt. 8th Aug., 1972 has also been with me in my possession ever since its execution. Whereas the gift under the said deed has been incohate and is incomplete for want of acceptance by the donee and has thus as validity whatever. Whereas as stated above I have been in enjoyment and possession of the said property in my own sole and absolute right continuously upto this date ever since the said purchase by me and there has been no change or transfer whatever effected by me under the deed of settlement referred to above, I hereby revoke and cancel the said deed of settlement dt 8th Aug., 1972 being document No. 962/72 of the office of the Sub-Registrar, West Madras, relating to the aforesaid property as being null and void and I am entitled to continue to own, possess and enjoy the said property more ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. It is not necessary for the purposes of the present order to refer to other contentions which were put forth before AAC. 8. The AAC after referring to certain observations in the Commentary by Sampath Iyengar on Three New Taxes and the decisions of the Andhra Pradesh High Court in Bhupathiraju Narasimharaju vs. Commissioner GT.(1), and the Kerala High Court in commissioner of GT, Kerala vs. R. Kesavan Nair (3), came to the conclusion that there had been no gift of the property in question. 9. The AAC gave finding that if there was a gift then the value of the liability charged on the property, namely, the amount due by the assessee to Sudersan Chit Funds for which the property in question had been mortgaged prior to the settlement should be allowed as a deduction. 10. The revenue appealed to the Tribunal. It was submitted that a valid gift had taken place on the execution of the Deed of Settlement and registration of the same. The assessee in turn relied on the facts mentioned and further stressed that the property continued to stand registered in the name of the assessee and even in the Corporation register there was no mutation. 11. The Judicial Member in his order dt. 27t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s lower than payable for registering a deed of gift. 17. The learned Standing Counsel for the Department submitted that the description of a document was not conclusive and the present document was only a deed of gift. In view of the aforesaid statement by the learned counsel for the Revenue and as the assessee also wants that the documents has to be construed as a deed of gift it is not necessary for us to go into the extent and scope of the term "settlement" in all its variations such as family arrangements, settlement through media of trust etc. 18. We now come to the question which we have to decide, namely whether the transaction is one of gift in the absence of acceptance by the donee and gift-tax can be levied. We make it clear that we understand the term " acceptance " to have the meaning that the item has acquired, namely, that the acceptance need not always be express and could also be implied. The learned Standing Counsel appearing for the Revenue submitted that s. 122 of the Transfer of Property Act defined 'gift'. This section, according to him, set out the concept of "gift". He submitted that in terms of that section for the gift to be complete, acceptance by or on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee and beneficiary". and submitted that the donee was a person who acquired the property under the gift. "Acquired", according to him, was a word of significance which means that the donee should have come into possession of some property consequent to a valid transfer. In support of his stand he relied on the ratio of the judgment of Kerala High Court in Commr. of GT vs. R. Kesavan Nair(3). 21. The learned Departmental counsel sought to submit that the decision of the Kerala High Court went on the footing that there was no provision in the document of settlement for vesting properties in the executees and the observations regarding the necessity for acceptance of a gift to be complete were in the nature of obiter dicta. He also submitted that in the decision of the Andhra Pradesh High Court referred to also the document was one of settlement and the Court had held that acceptance was not necessary to make the gift a valid gift. 22. We have considered the rival submissions s.3 of the GT Act is the charging section and reads as under: "3. Subject to the other provisions contained in this Act, there shall be charged for every assessment year commencing on and from the 1st day of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elivery" and "payment" are used as some of the modes of transfer of property. The dictionary gives various meaning, for those words but those meanings do not help us. We have to understand the meaning of those words in the context in which they are used. Words in the section of a statute are not to be interpreted by having those words in hand and the dictionary in the other. In spelling out the meaning of the words in a section, one must take into consideration the settling in which those terms are used and the purpose that they are intended to serve. If so understood, it is clear that the word "disposition", in the context, means giving away or giving up by a person of something which was his own, "conveyance" means transfer of ownership, "assignment" means the transfer of the claim, right or property to another, "settlement" means settling the property, right or claim--conveyance or disposition of property for the benefit of another, "delivery" contemplated therein is the delivery of one's property to another for no consideration and "payment" implies gift of money by someone to another. On the point of what constitutes "disposition" further amplification is available in the jud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t has also been clarified that the document is a document of gift (not exchange etc.). In order to bring the document within the definition of the terms "gift" under the GT Act, a bilateral element is essential which involves acceptance. 23. s. 122 of the Transfer of Property Act expressly states that if a donee dies before acceptance, the gift is void. If the contention of the Department, namely, that acceptance is not necessary for a gift to be complete and to be taxed under the Gift-tax is accepted, then if after the execution of the document and before acceptance the donee dies still gift-tax will be leviable. The Madras High Court in the case of A. Basaviah Gowder by L.R.B. Krishnan vs. Commr., of GT, Madras (6) after reading the definition in s. 2(Xii) together with 2 (xxiv) has stated as under: "Reading the two together, a gift in order to come within the scope of the Act must mean that the transfer by one of the means referred to of movable or immovable property by one person to another is made voluntarily and without consideration. It is inherent in the section that the person so transferred was the owner of the property and the person to whom it is transferred was not p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e judgment of the Andhra Pradesh High Court, therefore, it does not follow that the gift-tax can be levied straightaway but the legal effect to the gift has to be determined before gift-tax can be levied and the answer in the present case is that there is no legal gift, i.e., under the general law unless there is an acceptance. The observation in the judgment of the Andhra Pradesh High Court in the Expenditure Tax case (Prince Azam Jah Bahadur vs. CIT (2) no doubt support the stand of the Department. But this judgment was delivered prior to the decision of the Supreme Court in Goli Eswariah's case (5) and CIT vs. N.S. Getti Chettiar(4). 24. We have attempted to examined the issue afresh in the light of the later pronouncements of the Supreme Court as well as in the light of the gift pronouncement of the Madras High Court. We have come to the conclusion that where a transaction is one of gifts under the general law, the requirements of s. 122 of the Transfer of Property Act have to be satisfied, namely, that there should be acceptance before the transaction becomes exigible to gift-tax. We find that the conclusion which we have arrived at is in conformity with the conclusions of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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