9911796707
TMI Blog1998 (9) TMI 7X X X X Extracts X X X X X X X X Extracts X X X X ..... nt year 1982-83 declaring his income at Rs. 20,450. The Income-tax Officer added an amount of Rs. 34,550 to this income under section 64(1)(v) of the Act as an amount of Rs. 3,40,000 was received by the assessee's son under a family settlement dated April 1, 1981, and it amounts to transfer without consideration and consequently a gift and so, the interest accrued on this amount gifted by the assessee to his minor son is liable to be added to the income of the assessee under section 64(1)(v). The assessee appealed to the Appellate Assistant Commissioner and contended that the settlement would not amount to transfer and adding of interest accrued on this amount to the income of the assessee under section 64(1)(v) is not justified. The Appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the family arrangement, of movable property even when reduced to writing, need not be registered. He relied upon the decision in Kale v. Dy. Director of Consolidation, AIR 1976 SC 807, which lays down that the family settlement must be bona fide. In that decision, it is held that : "The family settlement must be a bona fide one so as to resolve family disputes and rival claims by a fair and equitable division or allotment of properties between the various members of the family. . . The family arrangement may be even oral in which case no registration is necessary. The registration would be necessary only if the terms of the family arrangement are reduced into writing." In the instant case, the deed executed by the assessee relates to mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ttlement will result in establishing or ensuring amity and goodwill amongst the relations. That consideration having passed by each of the disputants the settlement consisting of recognition of the right asserted by each other cannot be impeached thereafter." In the case of CIT v. Ponnammal [1987] 164 ITR 706 (Mad), it has been held that : "... in the instant case, it was found as a fact that the family arrangement had been brought about by the intervention of the panchayatdars and this clearly showed that the sons and daughters of the assessee were laying claims to the property which the assessee got under the will of her father and it was not relevant at the time when the family arrangement was entered into to find out as to whether s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e documents regarding the family arrangement had to be executed and accordingly, it was held that there is no transfer of property. In the decision reported in CGT v. S. M. Zaman and S. M. Elahi [1996] 221 ITR 842 (Gauhati) it was held that the family settlement was made just to avoid disputes and to maintain the honour and dignity of the family and accordingly. it was held that the family arrangement was valid and the provisions of section 2(xxiv)(d) of the Gift-tax Act, 1958, were not applicable. The instant case does not fall under that category. There is an immediate transfer of Rs. 3,40,000 by the assessee in favour of his minor son. There was also no existing dispute and rival claims. This settlement of Rs. 3,40,000 by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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