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TMI Blog1977 (3) TMI 7X X X X Extracts X X X X X X X X Extracts X X X X ..... of the properties mentioned in each schedule is given as Rs. 10,000. Pattas for these lands were also got transferred in the name of the respective donees. On January 22, 1960, a registered partition deed was entered into by the deceased and his wife acting as the guardian of the minor son, Parthasarathy, by and under which the properties described in the ' A' schedule thereto were allotted to the share of the deceased and the properties set out in 'B' schedule thereto and valued at Rs. l7,350 were allotted to the share of the minor. The properties set out in 'A' schedule thereto included those which the deceased had already settled on his wife and two daughters under the settlement deed dated July 25, 1959. On his death on October 14, 1962, his widow filed an estate duty account in which the value of the properties settled by the deceased on her and the two daughters under the settlement deed dated July 25, 1959, was not included. It was contended before the Asst. CED that there was an oral partition between the deceased and his son by metes and bounds even prior to the settlement deed dated July 25, 1959, and the properties were settled only subsequently and those properties were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mble to the settlement deed dated July 25, 1959, referred to the partition that took place between the deceased and his paternal cousin on April 5, 1959, and it did not refer to any partition between the deceased and his minor son. The Tribunal also noticed that there was no recital in the settlement deed that the deceased and his son had become divided in status. It was further contended on behalf of the accountable person before the Tribunal that even at the time of the settlement, it had been proposed to divide the properties between the deceased and his minor son and that necessary arrangements thereof have been made, but the same could not be completed. In support of this contention, reference was made to the recital in the partition deed dated January 22, 1960, that the properties allotted to the share of the deceased and set out in the 'A' schedule thereto had already been agreed to be allotted to him in the said arrangement. The Tribunal held that this recital did not show that there was such a division in status and the Tribunal once again pointed out that if there had been a division in the status, that would have been mentioned in the settlement deed dated July 25, 1959. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed and his minor son in the settlement deed dated July 25, 1959. Before the Tribunal, as we pointed out already, an attempt was made to show that there was a partition prior to July 25, 1959, because reference was made to such a partition in the settlement deed dated July 25, 1959. Having gone through the settlement deed as well as the partition deed which are annexed to the statement of the case, we are clearly of the opinion that the partition referred to in the settlement deed dated July 25, 1959, did not refer to the partition between the deceased and his minor son, Parthasarathy, but it referred only to the partition between the deceased and his paternal cousin, Kasivisvanatha Iyer, on April 5, 1959, because the properties dealt with under the settlement deed were said to be properties obtained by the deceased in a partition. We are also of the further opinion that neither the recitals in the settlement deed dated July 25, 1959, nor the recitals contained in the partition deed dated January 22, 1960, establish either a severance in status or a partition between the father and the minor son before July 25, 1959. The very laboured attempt made in the partition deed dated Janu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 57,350 the value of movable properties which were divided between the father and the son even before the execution of the partition deed dated January 22, 1960. We are unable to entertain any such contention in this reference. A perusal of the orders of the Asst. CED, the Appellate Controller and the Tribunal as well as the grounds of appeal preferred before the Appellate Controller and before the Tribunal show that no such contention was put forward before the authorities and no argument was advanced that the immovable properties, the value of which was Rs. 20,000 settled in favour of the two daughters, bore a reasonable proportion to the total assets of the joint family including the immovable properties the value of which was Rs. 57,350 and the movable properties. As a matter of fact, there is no reference to the value of any such movable property in the grounds of appeal before the two authorities below or in the arguments advanced before the authorities. Even the accountable person proceeded only on the basis that the reasonableness or otherwise of the proportion has to be tested only with reference to the total value of the immovable property of the family. In such a context ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9, will show that several items of immovable properties were included in each of the schedules allotted to the two daughters and, therefore, to use the language of the learned counsel, we can " scissor " the schedules and arrive at the reasonable proportion of the joint family properties and uphold the validity of the gifts with regard to such proportion. The learned counsel himself admitted that he could not cite or rely upon any principle or authority in support of this contention except his own submission. We are of the opinion that there is no warrant for such a contention either on principle or on authority. It has been repeatedly held that where such a gift is not of a reasonable proportion and within the permissible limits recognised by the Hindu law, the gift is void ab initio and with reference to such a void gift, there is no question of performing any " scissoring " operation. As a matter of fact, the judgment of one of us in Second Appeal No. 1490 of 1970 (Chandrasekaran v. Valliammal) dated 10th August, 1973, after referring to the earlier authorities of this court, has held that such a transaction was void and a nullity and notwithstanding the admitted gift and notwit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eased purporting to operate as an immediate gift inter vivos whether by way of transfer, delivery, declaration of trust, settlement upon persons in succession, or otherwise, which shall not have been bona fide made two years or more before the death of the deceased shall be deemed to pass on the death. " Consequently, for this section to apply, (1) there must be a disposition having taken place within two years before the death of the deceased; (2) the disposition shall not have been made bona fide ; and (3) the property under disposition must have been taken by the other party to the disposition. If only all these three conditions are cumulatively satisfied, s. 9(1) will apply. In this case, the property sought to be included in the dutiable estate is the income from the lands settled under the document dated July 25,1959, for a period of two years referred to already, namely, October 15, 1960, to October 14, 1962. For attracting s. 9(1), this income should have been taken under a disposition made within two years prior to the date of the death of the deceased. Admittedly, apart from the settlement deed dated July 25, 1959, which again is admittedly beyond two years prior to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty included therein down to and outstanding at the date of the death of the deceased. " Even though this section is in the form of a sub-section to s. 34, it is more or less in the nature of an independent provision providing that an estate will include all income accruing to the estate down to and outstanding on the date of death of the deceased. In this case if the income had accrued to the estate and was outstanding on the date of death of the deceased, there will be no difficulty in applying s. 34(4), even though the authorities below did not rest their conclusion on this statutory provision. Mr. J. Jayaraman, the learned counsel for the revenue, contended that there was no evidence to show that this income of Rs. 57,000 was not available on the date of death of the deceased but on the other hand the finding is that the deceased had not spent away this income and, therefore, the inclusion of that income in the dutiable estate was proper. We are unable to accept this argument. In para. 8 of its order, the Tribunal points out : " It is true that if the properties in question are to be considered to have belonged to the deceased till his death (as we have held above), the inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to a decision of the Kerala High Court in T. O. Hydrose v. CED [1971] 81 ITR 745 (Ker). In that case, one Kader Ooran gifted by way of settlement to his wife and eight children, one of whom was a minor, Rs. 40,000 worth of stock-in-trade, cash and cheques on March 31, 1960. On the next day, namely, April 1, 1960, he entered into a partnership with them, admitting the minor to the benefits of the partnership. Kader Ooran died on March 14, 1961. In the balance-sheet of the business for the year which was prepared on March 31, 1961, Rs. 31,069 was shown as the profit for the year that fell to the share of the wife and children. Since Kader Ooran died within two years from the date of the gift, the sum of Rs. 40,000 was deemed to pass to the donees only on the death of Kader Ooran under s. 9(1) of the E.D. Act. The Asst. CED included the sum of Rs. 31,069 also in the estate left by Kader Ooran. On appeal, the Appellate Controller excluded that amount from the estate of Kader Ooran. On further appeal, the Appellate Tribunal restored the order of the Assistant Controller. It was thereafter that the matter came to the High Court. The High Court held that the sum of Rs. 31,069 which repre ..... X X X X Extracts X X X X X X X X Extracts X X X X
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