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TMI Blog1998 (1) TMI 39X X X X Extracts X X X X X X X X Extracts X X X X ..... led a letter along with the return stating that the assessee owned life interest in certain properties at Tirunelveli, and all these properties were settled by him in favour of his children by two registered deeds dt. 4th Jan., 1969. The GTO accepted the return filed by the assessee and completed the assessment by computing the value of the life interest at Rs. 89,241 and levied the gift-tax thereon. The assessee filed an appeal to the AAC against the order of assessment contending that the surrender of life interest would not amount to gift. The AAC did not agree with the submissions made by the assessee and dismissed the appeal filed by the assessee. 3. The assessee carried the matter by way of filing a further appeal before the Tribunal. When the matter came up initially before the Tribunal, it was stated before the Tribunal that the original assessment itself was reopened under s. 15(3) of the Act and the reassessment under the Act was made on 11th May, 1973. The Tribunal, therefore, thought fit to hear both the appeals together and in this view of the matter, the Tribunal set aside the order of the AAC and restored the appeal to his file with a direction that the AAC should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the deed and what was gifted to the assessee was the corpus of the properties, and not the income of the properties. The Tribunal, therefore, held that the deed operated as an absolute gift is favour of the assessee and the conditions imposed in the deed were void in nature. The Tribunal also held that the gift made in the year 1953 was an absolute gift in favour of the assessee and the gifts made by the assessee in 1969 to his children were liable to be taxed under the Act. In this view of the matter, the Tribunal allowed the appeal preferred by the Revenue and dismissed the appeal preferred by the assessee. 7. It is against the order passed by the Tribunal in the appeal preferred by the Revenue, the assessee sought for and obtained a reference on the questions of law set out above. In so far as the order passed by the Tribunal on the appeal preferred by the assessee confirming the levy of gift-tax to the extent of the value of gift returned by the assessee is concerned, that order has become final. 8. Mr. R. Janakiraman, learned counsel for the assessee-strenuously contended that under Mohamedan law there can be a valid gift of life estate and with the absolute intere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mean that the gift to some who were in existence and some who were not in existence at the time of execution, but born in future, the gift would be valid in so far as the persons found in existence on the date of deed. For that purpose, he relied upon a decision of the Supreme Court in the case of Raj Bajrang Bahadur Singh vs. Thakurain Bakhtraj Kuer AIR 1953 SC 7. He also placed reliance on a decision of this Court in Mrs. Hazara Bai vs. Mohamed Adam Sait 1997(1) MLJ 291 wherein a learned judge of this Court held that there is no warrant to construe a document conferring life estate in favour of the settlee as one creating an absolute estate on the theory that life estates by way of gift is unknown to Mohomedan Law. He, therefore, submitted that the assessee cannot be construed as an absolute owner of the properties and the decision of this Court in Chandma Bibi vs. Sheik Mohamed Sahib Ors. 1997 1 LW 391 wherein a learned Judge of this Court has held that ownership was retained by the owner when the life interest could not be gifted under Muslim law has no application to this case. He therefore submitted that the finding of the Tribunal that the gift would take effect as if no c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmitted that there was no vesting in favour of the children of the assessee in 1953 document on the date of execution of the document. He submitted that the act of the assessee coupled with the execution the subsequent document would clearly show that what was given under 1953 document was the absolute interest in favour of the assessee. He submitted that the deed transferring properties in favour of unborn persons is void under Mohamedan law. He submitted that there was no vesting of the properties in favour of the sons or daughters of the assessee in the 1953 deed and if the properties had vested with the children of the assessee in 1953 itself by virtue of the settlement, the donor would not have stipulated that in the absence of sons or daughters, the properties would go to the legal heirs of the assessee and the said clause cannot be construed as a contingency clause. According to him the clause that properties would go after the lifetime of the assessee to the sons and daughters existing on the date of death of the assessee would clearly establish that the intention of the donor at the time of execution of 1953 document was not to give to the sons and daughters of the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the donor. The relevant clause of the deed reads as under : The deed provides that the first schedule properties were settled in favour of the eldest son, the assessee herein, and that he should during his life time enjoy the properties without the power of alienation and after his lifetime, the first schedule properties would go to the sons and daughters of the assessee who will take the property according to the share prescribed under the Mohamedan law and they would enjoy the properties absolutely. The deed also provides that if the assessee dies without leaving any son or daughter, the properties would go to the legal heirs of the assessee according to the Mohamedan law and they would enjoy the properties absolutely. Similar recitals are also provided in the deed in respect of four other sons and one of them was minor. A perusal of the abovesaid document would disclose that the settlor had given the assessee only life estate and the vested remainder to his children to take in accordance with Mohamedan law. 11. In C.M.S. Abdus Salam vs. CWT this Court dealt with the principles of Muslim law regarding the gifts and held that there are three essential conditions to be compl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tes in fee simple, in tail, for life, or in remainder. What Muslim law does recognise and insist upon, is the distinction between the corpus of the property itself (ayn) and the usufruct in the property (manafi). Over the corpus of property the law recognises only absolute dominion, heritable and unrestricted in point of time; and where a gift of the corpus seeks to impose a condition inconsistent with such absolute dominion, the condition is rejected as repugnant; but interests limited in point of time can be created in the usufruct of the property and the dominion over the corpus takes effect subject to any such limited interests". After laying down the law as regards the Muslim law, the Privy Council held that in dealing with the gift under Mohamedan law, the first duty of the Court is to construe the deed of gift. The appropriate test is whether it is a gift of corpus, then any condition which derogates from the absolute dominion over the subject-matter of the gift will be rejected as repugnant, on the other hand if on the construction of the gift deed, the gift is held to be one of a limited interest, the gift can take effect out of the usufructs leaving the ownership of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Bibi's case, cited supra, would also be applicable to the facts of the case. 15. It is also necessary to notice some observations made in the Mulla's Principles of Mohamedan Law (19th Edn.) at p. 134, s. 164, learned author says as under : "If a house is given to A for life, and after his death to B, the legal effect of the gift is that A takes the house absolutely, and B takes nothing. The same rule applies to a testamentary gift". In Abdul Karim Khan vs. Abdul Qayum Khan 28 ILR 342, one Muhammed Azim made a will whereby after making provision for his widow and daughters, he divided his property between his three sons and the will also provided that the son had no right of alienation and on the death of one of the sons without issues, his shares would go to the surviving brother or brothers or their heirs. A Division Bench of the Allahabad High Court held that the condition and limitation were void on the ground that life interest and contingent interest are not recognised by Muslim law and the gift in favour of the son was an absolute gift and the provisions that none of the sons should have a right to alienate the property devised to him and that on the death of one o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wife during her lifetime shall be entitled to the income derived from the property. This Court therefore held that there was a reservation of usufructs in favour of the donor and absolute and valid gift of the corpus was granted in favour of the daughter of the settlor and therefore, it was held that there was a valid gift. The above decision was confirmed by the Supreme Court in the case of Jameela Begum vs. CED , wherein the Supreme Court held that the Mohamedan law makes a difference between the corpus of the gift (Ayn) and the usufruct (Manafi) and a reservation of rights in manafi so long as the ayn is transferred does not render the gift bad. The Supreme Court held that under the settlement, an absolute right, title, and interest over the property was conferred on the beneficiary and he was obliged only to pay the income from the property to the settlor during his lifetime and after his death to his wife, mother of the beneficiary during her life time. The Supreme Court therefore held that the settlement with the condition is valid. But the decision has no application to the facts of the case as there was no vesting of the property in favour of the grand children by the orig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le class". He therefore submitted that since an absolute interest was created in favour of the existing sons and daughters of the assessee as well as the children of the assessee to be born, an absolute interest was created in favour of sons and daughters existing on the date of the execution of the deed and those children would take the property absolutely vested with them. For that purpose, he relied upon a decision of the Supreme Court in the case of Raj Bajrang Singh vs. Thakurain Bakhtraj Kuer AIR 1953 SC 7. Paragraph 14 reads as under : "14. Of course, this by itself gives no comfort to the defendant; she has to establish, in order that she may be able to resist the plaintiff 's claim, that the will created an independent interest in her favour following the death of Dhuj Singh. As we have said already, the testator did intend to create successive life estates in favour of the successive heirs of Dhuj Singh. This, it is contended by the appellant is not permissible in law and he relies on the case of Tagore vs. Tagore, 18 WR 359. It is quite true that no interest could be created in favour of an unborn person but when the gift is made to a class or series of persons, so ..... X X X X Extracts X X X X X X X X Extracts X X X X
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