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TMI Blog2006 (7) TMI 293X X X X Extracts X X X X X X X X Extracts X X X X ..... ishnan were brothers born to Shri M. Chinnappa Gounder and wife Smt. C. Elayammal and the family tree is as under :- Shri M. Chinnappa Gounder and wife C. Elayammal (Parents) C. Doraisamy C. Krishnan D. Kavery-wife K. Susheela-wife K. Hamsavalli (married daughter) K. Balasubramaniam D. Venkateswaran K. Karthikeyan D. Janaki K. Bharani D. Shanmugasundaram. 4. Shri C. Duraisamy passed away on 29-1-1987 leaving behind legal heirs of the family being wife, one married daughter, one unmarried daughter and two sons. Shri C. Duraisamy and Shri C. Krishnan were residing together in their house at 74, Park Road, Erode and after the death of Shri C. Duraisamy, Shri C. Krishnan took over the affairs of the family. The assessee was a business family and holding various assets belonging to the family in different names. In the family there started some dispute regarding the ownership of various assets and there was also some apprehensions in the minds of one or the other members of the joint family. To avoid possible dispute in the family, Shri C. Krishnan decided to make a family arrangement by which the entire properties were pooled together and reallocated to the various members of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed the gift to tax as the transfer is without consideration. Aggrieved the assessees preferred an appeal before the CGT(A). 7. The CGT(A) after examining the issue held that the property bequeathed on Smt. D. Janaki by these assessees in view of the family settlement deed and Stridhan settlement dated 8-11-1989 cannot be treated as gift. Accordingly, he allowed the claim of the assessees. Aggrieved, now the revenue is in appeal before us. 8. The Revenue's main contention is that in the family settlement dated 4-8-1988, it is clearly stated that the members who own the property at Bhavani Road will give the property. So the property given to Smt. D. Janaki amounts to gift as Smt. D. Janaki did not have any interest in the property prior to the family settlement deed. The Revenue contended that ld. CGT(A) has held that obligation by way of Stridhan settlement has to be given by the family members of the family at the time of marriage. Hence, it is covered by Hindu Succession Act as passed by (Tamilnadu Amendment) Act, 1989. The Revenue in view of this, contended that the CGT(A) is incorrect as the family settlement deed dated 4-8-1988 has separately provided that at the time of he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has in mind cannot be equated with a mere severance of the status of the joint family which can be effected by an expression of a mere desire by a family member to do so. The partition that the Legislature has in mind is a partition complete in all respects which has brought about an irreversible situation. If a partition of the property is effected by metes and bounds, the daughters cannot be deprived of the benefits conferred by the Act. The Hon'ble Supreme Court has held that the legislation is beneficial and placed on the statute book with the avowed object of benefiting daughter which is a vulnerable section of the society in all its stratas, it is necessary to give a liberal effect to it. Further, as per the amended provisions in the Hindu Succession (Tamilnadu) Act, the difference between daughter and son of the Mitakshara Hindu Family is removed and the daughter is conferred the coparcenary rights in the joint family property by birth in the same manner and to the same extent as the son. In view of the new provisions, daughter is entitled to claim partition of HUF. 11. The Hon'ble Apex Court in the case law cited supra, held, that by way of amendment, section 29A was intr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... indu Mitakshara family were not entitled to any share in the joint family property. But the State of Andhra Pradesh removed the injustice to the daughters so far as that State was covered by newly introduced section 29A in the Act and the Hon'ble Apex Court has held in para 6 that by way of amendment, the daughter is conferred the coparcenary rights in the property by birth in the same manner and to the same extent as the son, para 6 of the judgment reads as under: "6. It is obvious that under the aforesaid provision, the difference between daughter and son of the Mitakshara Hindu family is removed and the daughter is conferred the coparcenary rights in the joint family property by birth in the same manner and to the same extent as the son. She is, therefore, now entitled to claim partition and her share in the family property. The amending provision is a beneficial legislation which, among other things, is also directed towards eradicating social evils such as dowry and dowry deaths. It also achieves the constitutional mandate of equality between sexes." The Hon'ble Apex Court further has held in paragraph 7 as under: "7. The question that falls for our consideration is whether ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed the amending Act came into force as a result of which clause (ii) of section 29A of the Act became applicable. This intervening event which gave shares to respondents 2 to 5 had the effect of varying shares of the parties like any supervening development. Since the legislation is beneficial and placed on the statute book with the avowed object of benefiting women which is a vulnerable section of the society in all its stratas, it is necessary to give a liberal effect to it. For this reason also, we cannot equate the concept of partition that the Legislature has in mind in the present case with a mere severance of the status of the joint family which can be effected by an expression of a mere desire by a family member to do so. The partition that the Legislature has in mind in the present case is undoubtedly a partition completed in all respects and which has brought about an irreversible situation. A preliminary decree which merely declares shares which are themselves liable to change does not bring about any irreversible situation. Hence, we are of the view that unless a partition of the property is effected by metes and bounds, the daughters cannot be deprived of the benefits ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he commencement of the Hindu Succession (Tamilnadu Amendment) Act, 1989; (v) nothing in clause (ii) shall apply to a partition which had been effected before the date of the commencement of the Hindu Succession (Tamilnadu Amendment) Act, 1989. 29B. Interest to devolve by survivorship on death.-When a female Hindu dies after the date of the commencement of the Hindu Succession (Tamilnadu Amendment) Act, 1989, having at the time of her death, an interest in a Mitakshara coparcenary property by virtue of the provisions of section 29A, her interest in the property shall devolve by survivorship upon the surviving members of the coparcenary and not in accordance with this Act: Provided that if the deceased had left any child or child of a pre-deceased child, the interest of the deceased in the Mitakshara coparcenary property shall devolve testamentary or intestate succession, as the case may be, under this Act and not by survivorship." In view of the above discussions, considering the provisions of Hindu Succession Act, 1956 as amended by Hindu Succession (A.P. Amendment) Act, 1986, introduction of section 29A which was confirmed by the Hon'ble Apex Court in the case of S. Sai Reddy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rwise the assessee's claim is that, whether property divested on Smt. D. Janaki by way Stridhan settlement deed dated 8-11-1989 on the basis of family settlement dated 4-111989 will not attract capital gain or not. 16. The brief facts are that the family settlement deed dated 4-81988 was made keeping in view the possible dispute in the family and Shri C. Krishnan decided to make a family arrangement by which the entire property were pooled together and are reallocated to the various members of the family as per the family arrangement. Accordingly various members of the family settlement dated 4-8-1988 was entered into by all the Members of the family and are signatory to this family settlement deed. At that point of time the family had decided to allot some property to Smt. D. Janaki, being the only unmarried daughter and as per this Family Settlement Deed, the godown building situated at Bhavani Road, Erode was allocated to her. As narrated above in para 3 actually this property was originally owned by six co-owners. They are either father or uncle or brothers of Smt. D. Janaki. We will discuss the issue as to whether by way of family settlement in the joint farnily, property can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngements, considers what in the broadest view of the matter is most for the interest of families, and has regard to consideration which, in dealing with transactions between persons not members of the same family, would not be taken into account. Matters which would be fatal to the validity of similar transactions between strangers are not objections to the binding effect of family arrangements.' This passage indicates that even in England Courts are averse to disturb family arrangement but would try to sustain them on broadest considerations of the family peace and security. This concept of a 'family arrangement' has been accepted by Indian Courts but has been adapted to suit the family set up of this country which is different in many respects from the obtaining in England. As in England so in India, Courts have made every attempt to sustain a family arrangement rather than to avoid it, having regard to the broadest considerations of family peace and security. (17) Briefly stated, though conflict of legal claims in praesenti or in future is generally a condition for the validity of a family arrangement, it is not necessarily so. Even bona fide disputes, present or possible whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the entire country, is the prime need of the hour. A family arrangement by which the property is equitably divided between the various contenders so as to achieve an equal distribution of wealth instead of concentrating the same in the hands of a few is undoubtedly a milestone in the administration of social justice. That is why the term 'family' has to be understood in a wider sense so as include within its fold not only close relations are legal heirs but even those persons who may have some sort of antecedent title, a semblance of claim or even if they have a spes successionis so that future disputes are sealed for ever and the family instead of fighting claims inter se and wasting time, money and energy on such fruitless or futile litigation is able to devote its attention to more constructive work in the larger interest of the country. The Courts have, therefore, leaned in favour of upholding a family arrangement instead of disturbing the same on technical or trivial grounds. Where the courts find that the family arrangement suffers from a legal lacuna or a formal defect the rule of estoppel is pressed into service and is applied to shut out plea of the person who being a pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sputes, present or possible, which may not involve legal claims or settled by a bona fide family arrangement which is fair and equitable the family arrangement is final and binding on the parties to the settlement. The Hon'ble Apex Court relying on the decision in the case of S. Shanmugam Pillai v. K. Shanmugam Pillai AIR 1972 SC 2069 after an exhaustive consideration of the authorities on the subject, observed as under:- "Equitable principles such as estoppel, election, family settlement, etc. are not mere technical rules of evidence. They have an important purpose to serve in the administration of justice. The ultimate aim of the law is to secure justice. In the recent times in order to render justice between the parties. Courts have been liberally relying on those, principles. We would hesitate to narrow down their scope." 20. Further, the Hon'ble Supreme Court in the case of SK Sattar SK. Mohd Choudhari v. Gundappa Ambadas Bukate [1996] 6 SCC 373 has held in respect family arrangement as under: "Section 5 contemplates transfer of property by a person who has a title in the said property to another person who has no title. A family arrangement, on the contrary, is a transacti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of interest by way of effecting family arrangements among the family members would not amount to transfer. The Tribunal found that the family arrangement was a bona fide one inasmuch as it was made voluntarily and not induced by any fraud or collusion and the conduct of the parties was consistent with the bona fide family arrangement particularly when it was arrived at in the present of panchayatdars. The family arrangement involved in the above case did not amount to transfer. Therefore, no capital gains arose." 22. From the above case laws it is clear that a family arrangement is based on the assumption that there is an antecedent title of some sort in the parties and the agreement acknowledges and defines with that title is, each party relinquishing all claims to property other than that falling to his share and recognising the right of the others, as they had previously asserted it to the portions allotted to them respectively (sic). These observations do not mean that some title must exist as a fact in the persons entered into a family arrangement. They simply mean that it is to be assumed that the parties to the arrangement had an antecedent. It is also to be noted that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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