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TMI Blog1979 (6) TMI 20X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Gift-tax Act, 1958 ? ". Sri S. Vaidyanatha lyer, who is now no more and who is the father of the assessee, executed a will on November 17, 1957, under which he bequeathed to the assessee 27 acres and 90 cents of wet lands and 5 acres and 32 cents of dry lands totalling 33 acres and 32 cents in certain villages in Kumbakonam taluk, Thanjavur District, to be enjoyed by him for his lifetime without any power of alienation. After the lifetime of the assessee the lands were to be taken by his grandson R. V. Ramani and Sakuntala and Lalitha, his grand daughters with absolute rights equally, that is, 1/3 share each. Sri Vaidyanatha Iyer died on September 5, 1958. The assessee took possession of the lands and was in enjoyment of the same. O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held that the transaction amounted to a transfer of property within the meaning of s.2(xxiv)(d) of the Act and hence a gift under s. 2(xii) of the Act liable to be taxed. The total value of the property gifted was taken to be Rs. 52,040 and a tax of Rs. 2,954 was levied. The assessee appealed to the AAC contending that he had only surrendered his life interest and that it did not amount to a gift. The AAC upheld this contention and cancelled the entire assessment. The department appealed to the Tribunal. The Tribunal held that R. V. Ramani, Sakuntala and Lalitha were co-owners of the vested remainder in the lands that had been bequeathed to the assessee by his late father, that after the lifetime of the assessee they could have either enj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contained thereunder, my younger son Subramaniyan will take after my death the properties mentioned hereunder in Schedule A without any power to alienate the same and enjoy only the income from the same, paying the Government kist, etc. After the lifetime of the said Subramaniyan my grandson R. V. Ramani his heirs will take one-third of the same, his wife Sow. Sakuntala, her heirs will take one-third share, and another grand-daughter Sow Lalitha, her heirs will take one-third share, absolutely. " As already stated the total extent of the property bequeathed came to 33 acres and 32 cent. In the deed of release executed by the assessee, it was stated as follows : " WHEREAS the releasor considers that he being a bachelor, the income from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the property. According to him, they had already an interest in the property by reason of the will and the release did not make any difference to their right except that they got the absolute interest in present in the property. We have already extracted the relevant part of the will in which the testator specifically stated that his grandson, Ramani and his grand-daughters Sakuntala and Lalitha would take 1/3 share each. In the entire properties left by the testator they thus get 1/3 share subject to the life interest of the assessee. The assessee could have transferred his life interest in favour of any stranger. Instead of transferring the property in favour of a stranger, the assessee by executing this release, made the releasees the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... indermen to whom the property should go. If he does so, then clearly he transfers the life interest in favour of these persons and that is what has happened in this case. Therefore, this is clearly a case of grant of interest in the property in favour of Ramani and Sakuntala. The transaction would thus squarely fall within the scope of s. 2(xxiv)(b) of the Act. It is unnecessary in this view to go into the applicability of s. 2(xxiv)(d) of the Act. Further, if the doctrine of acceleration has to be applied here as a result of the execution of the document of release, then as a legal consequence each of the three individuals would get a present interest with reference to 1/3 share in each of the properties bequeathed by the testator. That ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder was in favour of the entire body of the remaindermen and not in favour of any chosen individuals who formed a part of the said body. That case was such as to fall within the doctrine of acceleration as discussed above. The learned counsel then referred to the decision in CGT v. Mrs. Jer Mavis Lubimoff [1978] 114 ITR 90 (Bom). In that case, Mrs. Lubimoff had a life interest in certain trust properties. She was also given a power of appointment with reference to certain class of persons who were intended to be benefited under the trust. She executed the power of appointment and she executed also a release deed in respect of her life interest in the properties under the trust deed. The question was whether these two transactions amounte ..... X X X X Extracts X X X X X X X X Extracts X X X X
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