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TMI Blog1987 (8) TMI 167X X X X Extracts X X X X X X X X Extracts X X X X ..... O rejected these contentions and relying on the decision of the Andhra Pradesh High Court in Vadulla Venkata Rao v. CGT [1972] 85 ITR 249 and also on the decision of the Madras High Court in Ramaswamy Naidu v. M. S. Velappan [1979] II MLJ 88 assessed the value of the gift at Rs. 1,10,710 and brought the same to tax in the hands of the assessee. 2. The AAC to whom the assessee appealed, confirmed the assessment by holding that in the present case the interest in the property as vested in the son, the donee, on the same day when the document was executed, though his right to possess and enjoy the property was postponed to a later date and hence this would not make the document a will, since the transfer of the interest in favour of the son by the donor amounts to a gift taxable under the Act. This is being objected to by the appellant in the present appeal. 3. Shri V. Jagadisan, the learned Chartered Accountant for the appellant placed before us a copy of the deed of settlement executed by the appellant on 28-3-1981 and submitted that under the terms of this document there was no gift in praesenti in favour of the son, which would attract liability to gift-tax. He argued that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Revenue's case. He argued that the decision in the case of P. Ayya Naidu also did not help the assessee, as there is a transfer of property in praesenti under the deed of settlement to the son as could be seen from a reading of clauses (1) and (2) of the settlement deed, which was irrevocable and on which stamp duty has been paid as a deed of settlement and registered under the Registration Act. Shri Seshagiri Rao particularly relied on paras 14 to 17 in the case of Ramaswamy Naidu. He, therefore, submitted that the departmental authorities have acted rightly in bringing to tax the gift made by the appellant under the deed of settlement and that the same should be upheld. 5. We have carefully considered the submissions urged on both sides in the light of the materials placed before us and the authorities relied on by them. The appellant had executed a registered deed of settlement on 28-3-1981 in favour of his son P. Venkata subramanian with a view to provide for the settlee and out of natural love and affection reserving a life interest for himself without any powers of alienation for the settlor. We set out below clauses (1) to (4) of the settlement deed for facility of refe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... struing another document except principles or guidelines. The only general principle or guideline that can be said to have been laid down in this behalf is that the document should be read as a whole and it is the substance of the document that matters and not the nomenclature, and what determines the charter of the document is the nature of the disposition contained therein as to whether it was intended to take effect in praesenti or it was intended to take effect on the death of the owner of the properties." 8. The decision of the Madras High Court in the case of Ramaswamy Naidu at page 92 lays down the important tests to be applied in such cases, which are quoted below : "14. While interpreting an instrument, particularly to find out whether it is of a testamentary character, which will take effect after the lifetime of the executant or whether it is an instrument creating a vested interest in praesenti in favour of a person, the question has to be examined with care, after looking into the sub-stance of the document, the treatment of the subject by the settlor, the intention appearing both expressly in the instrument and by necessary implication, and the avowed intention of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cumulated until the time of enjoyment arrived, or from a provisions that if a particular even shall happen the interest shall pass to another person.'" At page 93 of the reports in paras 18 and 19, their Lordships have held as follows : "..... The Explanation to sec. 19 of the Transfer of Property Act providing that a vested interest is not defeated by the death of the transferee before he obtains possession, makes the legislative intent clear that such a vested interest, merely for the reason that it becomes vested after the lifetime of the settlor, would not make it a settlement not being in praesenti. We are therefore unable to agree with the content that the interest that Velappan, the first plaintiff, obtained under the instrument is not a vested one and that it could be defeated because it is postponed till after the lifetime of Meenakshi Ammal. 19. In the instant case the document itself is styled as a settlement deed. It has been registered. The right to enjoy the properties and secure the benefits and the temple honours as trustee under it have become a fail accompli even during the lifetime of Meenakshi Ammal ...." Finally, in para 21 at page 94 of the reports, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ti in favour of the son of the appellant, though there is a postponement of the enjoyment of the rights by the son after the lifetime of the settlor. 10. In the decision of the Madras High Court in the case of P. Ayya Naidu the facts were entirely different as could be seen from the recitals of the document as well as the head note. In fact, at page 503 of the reports their Lordships have held as follows on a reading of the recitals in the said document : "Even a casual reading of the above recitals will clearly show that there are absolutely no words to indicate the present vesting of any interest in favour of the daughters and grandchildren of the vested remainder after the life interest of the assessee and his wife. On the other hand, the following specific recitals will clearly indicate that the assessee intended that the vested remainder granted in favour of the daughters and grandchildren should take effect only after the lifetime of his wife and himself :" Again at page 504 their Lordships have held as follows : "Thus, there is a specific recital that the vesting of the remainder interest should take effect after the lifetime of the spouse and on the next day of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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