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TMI Blog1969 (8) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... single judgment. We first take up D. B. Civil Income-tax Reference No. 66/66. The Income-tax Appellate Tribunal, Delhi Bench ' C ' (hereinafter called "the Tribunal "), has referred the following question for the opinion of this court under section 66(1) of the Income-tax Act, 1922 (hereinafter called "the Act ") :- " Whether, on the facts and in the circumstances of the case, the gift of Rs. 4 lakhs was voidable and as such the interest accruing on the aforesaid gifted amount did not accrue to the family for income-tax purposes?" The statement of the case submitted by the Tribunal shows that the assessee is a Hindu undivided family whose karta is Shri Ramswaroop. By a deed dated 25th February, 1956, Shri Ramswaroop gifted to the und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... make gifts of a substantially large amount to the donees. He therefore assessed the total income of the assessee after including the aforesaid sum of Rs. 4,00,000 and estimated amount of interest thereon of each of the above years. Appeals were preferred to the Appellate Assistant Commissioner, Udaipur, and the said officer called for a report from the Income-tax Officer as to the circumstances under which the gift had been made and also as to the real motive behind the gifts. After receiving the report, the Appellate Assistant Commissioner, Udaipur, decided the appeals in favour of the assessee. Appeals against the orders of the Appellate Assistant Commissioner were filed before the Tribunal by the department and the Tribunal directed that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ho is a stranger to the family and does not possess a right to have the transaction defeated on other grounds (e.g., under section 53, T.P. Act), has a locus stand to intervene and impugn it merely because it was in excess of the authority which the karta possessed to deal with it for family purposes. " This case has been relied on in Brahamdutt Bhargava's case. Learned counsel for the department has relied on A. Basaviah Gowder v. Commissioner of Gift-tax and Smt. Valluri Janakamma v. Commissioner of Gift-tax . Brahamdutt Bhargava's case is binding on us and we do not feel any necessity for referring the case to a larger Bench, specially for the reason that in our view whether the gifts are void or voidable, the interest accruing on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gifted. In the instant case, there is no question that the amount of Rs. 4,00,000 which was gifted has gone into the hands of the strangers and they had earned some income out of that amount of Rs. 4,00,000. Even if the gifts are treated as void, it is not the assessee who has earned any income out of the amount of Rs. 4,00,000. Under the Income-tax Act, tax is leviable under section 3 on the total income of the previous year of every individual, Hindu undivided family, company and local authority and of every firm or other association of persons or the partners of the firm or the members of the association individually. Inclusive definition of " income " has been given in section 2(6C) of the Act. The case before us does not fall within th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Finance Act, 1922, section 20, designed to overtake and circumvent a growing tendency on the part of taxpayers to endeavour to avoid or reduce tax liability by means of settlements. Stated quite generally, the method consisted in the disposal by the taxpayer of part of his property in such a way that the income should no longer be receivable by him, while at the same time he retained certain powers over, or interests in, the property or its income. The Legislature's counter was to declare that the income of which the taxpayer had thus sought to disembarrass himself should, notwithstanding, be treated as still his income and taxed in his hands accordingly." This is not the case here. There is no doubt that in this case Shri Ramswaroop w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... required to be included in his net wealth as on that date under this Act, is in excess of the aggregate value of all the debts owed by the assessee on the valuation date other than ........" In our opinion, in the instant case, the amount of rupees four lakhs which had been gifted by Shri Ramswaroop to the various donees referred to above did not remain in the hands of the assessee inasmuch as this entire amount of four lakhs had passed into the hands of the donees. It may be that the members of the assessee family may have a right to recover back those amounts under certain circumstances; but merely because of this, that sum cannot be treated as their asset of such tangible value as may attract the provisions of section 3 of the Act for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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