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TMI Blog1985 (10) TMI 48X X X X Extracts X X X X X X X X Extracts X X X X ..... itory. The said wealth belonged to the assessee, namely, the Hindu undivided family. Gangadhar as the karta of the family made several gifts. The gifts with which we are concerned are a gift of immovable property of the value of Rs. 4,00,000 to his wife and gifts of money amounting to Rs. 4,80,000, Rs. 1,00,000 and Rs. 45,000 in the previous years relevant to the assessment years 1964-65, 1965-66 and 1966-67, respectively, to his relations. The gift of immovable properties of Rs. 4,00,000 was made by Gangadhar to his wife in 1963. From the order of the Income-tax Officer, it appears that gifts aggregating to Rs. 4,80,000 were made by Gangadhar in the previous year relevant to the assessment year 1964-65 and they were gifts to his sister-in-law, nephews, niece, cousin and a sister. Gifts amounting to Rs. 1,00,000 in cash were made by Gangadhar to two of his nephews in the previous year relevant to the assessment year 1965-66 and gifts amounting to Rs. 45,000 in cash were made in the previous year relevant to the assessment year 1966-67 by Gangadhar to his sister-in-law and to his sister, respectively. The Income-tax Officer held that these gifts were not valid in law and he taxed th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd it is only one of the members of the assessee-Hindu undivided family who could apply for setting aside that gift. As no such application was made, it was not open to the income-tax authorities to treat the said gift as void or invalid and to include the income earned from the same in the income of the assessee on that footing. It was, on the other hand, contended by Mr. Jetly, learned counsel for the Revenue, that Gangadhar as the karta had no power in law to make the said gift of immovable properties to his wife. The gift made was altogether beyond the power of the karta and hence was void and not merely voidable. The controversy raised in this question has, to some extent, been considered in certain judicial decisions which it would be useful to notice. In Ammathayee alias Perumalakkal v. Kumaresan alias Balakrishnan, AIR 1967 SC 569, one of the controversies related to a gift made by a deceased in favour of his second wife of certain immovable property belonging to his joint family. In connection with this question, the Supreme Court observed as follows (p. 572) : "Hindu law on the question of gifts of ancestral property is well settled. So far as movable ancestral proper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hindu law, the Supreme Court observed as follows (p. 516): "The decisions of Hindu law sanctioned gifts to strangers by a manager of a joint Hindu family of a small extent of property for pious purposes. But no authority went so far, and none has been placed before us, to sustain such a gift to a stranger, however much the donor was beholden to him on the ground that it was made out of charity. It must be remembered that the manager has no absolute power of disposal over joint Hindu family property. The Hindu law permits him to do so only within strict limits. We cannot extend the scope of the power on the basis of the wide interpretation given to the words 'pious purposes' in Hindu law in a different context. In the circumstances, we hold that a gift to a stranger of a joint family property by the manager of the family is void. " Both the aforesaid decisions of the Supreme Court have been considered by a Full Bench of the Punjab and Haryana High Court in CGT v. Tej Nath [1972] 86 ITR 96. The gifts in question were of a large area of land belonging to the Hindu undivided family of Tej Nath, the very assessee Who was the very party concerned in the aforesaid case. The gifts were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he family's relations towards the rest of the world. In the case of a gift, however, the position under Hindu law is different.... If an individual member, i.e., a coparcener, cannot make a valid gift in respect of his undivided interest in the coparcenary property, we fail to see how a managing member would be able to make a valid gift in respect of the family property. " Dixit J. pointed out that there is an essential difference between the case of a deed of sale and a deed of gift (at p. 283 of AIR). It was pointed out by Dixit J., that the deed of gift in question was not affirmed at any time by other coparceners. Vyas J., in his concurring judgment, has stated as follows (at p. 288 of AIR) : " Mr. Paranjpe says that this is a case of a donor having merely exceeded his power and, therefore, the gift is not void but voidable. The contention must fail. Where there is power, there can be a case of an excess of power. Where there is a right, there can be a case of an excess in the exercise of that right. Where there is no power at all to start with, no question can arise of a person having acted in excess of it. A person has no power at all to give away that which is not his ow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ratio of the case and observations therein are not applicable to the case before us. Mr. Joshi next relied upon the decision of a Division Bench of the Madras High Court in CGT v. R. M. D. M. Ranganathan Chettiar [1982] 133 ITR 890. This decision, we are afraid, is of no assistance to Mr. Joshi at all. In that case, the karta of the assessee-Hindu undivided family gifted a half share of the immovable property and the movables valued at Rs. 20,000 belonging to the family to his wife. The High Court on reference took the view that the gift of immovable property by the karta of Hindu undivided family to his wife was not valid. This decision nowhere supports the contention that the gift was merely voidable but not void. What was held by the Madras High Court was that the gift was invalid ", which is quite consistent with its being void. The decisions of the Supreme Court in Ammathayee alias Perumalakkal v. Kumaresan alias Balakrishnan, AIR 1967 SC 569, and Guramma Bhratar v. Mallappa, AIR 1964 SC 510, contain passages to which we have already referred. These passages, although they do not state specifically that the gift of an immovable property belonging to the coparcenary by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ren and others recognised as such according to the texts of Hindu law and, although other persons may be related to the karta or coparceners, in the context of the family they must be regarded as strangers. Mr. Joshi, however, submitted that close relatives of the karta like the ones in question before us cannot be regarded as strangers to the family, and in support of that contention, he relied upon the decision of a Division Bench of the Punjab and Haryana High Court in CIT v. Daljit Singh [1981] 131 ITR 719. In that case, the gifts were, inter alia, of movables, namely, Hindu undivided family funds to the respective wives and minor children of the karta's brothers. The Division Bench took the view (pp. 724-25) that the donees were nearly related to the donor and the gifts made by the karta, as the donor, on account of love and affection to these relatives cannot be said to be void. If the gifts are of excessive amounts or are not given for love and affection, these may be termed as voidable and can be challenged by the sons and not by third persons. With respect, we are unable to agree with this view. As we have already pointed out, the decision of the Full Bench of the Punjab a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the High Court, both under the Income-tax Act and the Wealth-tax Act, it was held by the High Court that the interest accrued on the gifted amounts did not accrue to the assessee-family for the purpose of income-tax on either view, namely, whether the gifts of Rs. 4,00,000 were void or voidable. The entire sum had passed into the hands of the other persons and they were earning income from the same and not the assessee. The Income-tax Act taxes the person whose income it is and not the person who may, per chance, have title to the property through which the income had been earned. With respect, we are unable to agree with the decision in the aforesaid case or to accept the submission of Mr. Joshi. We may point out that under section 4 of the Income-tax Act, the charge of income-tax is in respect of the total income of every person. Section 5 defines the scope of the term "total income", and, inter alia, states that, in the case of a resident, it includes all income which is received or deemed to be received in India by or on behalf of a resident-assessee. Section 9 deals with incomes which were deemed to accrue or arise in India. In the present case, if the gifts were void, it was ..... X X X X Extracts X X X X X X X X Extracts X X X X
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