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TMI Blog1976 (7) TMI 49X X X X Extracts X X X X X X X X Extracts X X X X ..... otation of a will and a gift found in several text books and also considering how particular documents have been construed by courts as a will or a gift, we consider it desirable to extract the entire document omitting the schedules only. "Deed of settlement executed at Madras this first day of July, 1963, by (1) Dewan Bhahadur C. Thiruvenkata Mudaliar, son of C. Ramanuja Mudaliar, Hindu, residing at No. 12, Boag Road, Theagaraya Nagar, Madras, and (2) Mrs. Yeshoda Bai Thiruvenkatam, wife of Dewan Bahadur C. Thiruvenkata Mudaliar, Hindu, residing at the same address, hereinafter referred to as the settlors, which terms shall mean and include their heirs, executors, administrators, legal representatives and assigns and of each of them to and in favour of, (1) C. T. Gopalakrishnan, Agent, Esso, residing at No. 41, Periamaniagara Street, Chingleput, and (2) C. T. Radhakrishnan, Project Engineer, Heavy Electricals Ltd., Tiruchirapalli, both Hindus, sons of Diwan Bahadur C. Thiruvenkata Mudaliar, hereinafter referred to as the settlees which terms shall mean and include their heirs, executors, administrators, legal representatives and assigns and of each of them. Whereas the first s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... power to alienate or otherwise dispose of the same in any manner such as by way of gift, exchange, mortgage, etc. 2. Subsequent to the lifetime of both settlors, the first settlee, C. T. Gopalakrishnan, shall take and enjoy house and ground No. 12, Boag Road, Theagaraya Nagar, Madras, being item 1 of the schedule during his lifetime without any power to alienate or dispose of the same in any manner such as by way of gift, exchange, mortgage, etc. 3. After the lifetime of the first settlee, C. T. Gopalakrishnan, his heirs shall take and enjoy the said house and ground No. 12, Boag Road, Theagaraya Nagar, Madras, absolutely as full and beneficial owners absolutely and for ever peaceably and quietly without any let or hindrance from any persons whatsoever. 4. Likewise, subsequent to the lifetime of the settlors, the second settlee, C. T. Radhakrishnan, shall take and enjoy house and ground No. 2, Vadagiri Street, Adivaram, Palani, being item No. 2 of the schedule during his lifetime, without any power to alienate or dispose of the same in any manner such as by way of gift, exchange, mortgage, etc. 5. After the lifetime of the second settlee, C. T. Radhakrishnan, his heirs sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd a transfer in praesenti is intended and comes into effect. From the very nature of the case, a will is revocable because no interest is intended to pass during the lifetime of the owner of the property and, therefore, even if a will contains a clause that it is irrevocable, the law makes it revocable. Similarly, in the case of a gift, because it comes into operation immediately, even if it contains a clause that the settlor or the donor can revoke it, still it will remain irrevocable under the law because the donee obtains his interest in the property on the execution of the document itself. Consequently, whether a particular document contains a provision as to whether it is revocable or irrevocable is not decisive of the question whether it is a will or a gift. Equally, the caption or the nomenclature given by the parties to the transaction is again not decisive of the question as to whether it is a will or a gift. If a particular document provides for immediate transfer of the interest from the original owner to somebody else, notwithstanding the fact that the parties called it a will, it will operate only as a gift. Similarly, if a document contains provisions which undisputa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Adivaram, Palani, without any power of alienation or disposal of the same. (vi) After the death of Radhakrishnan, his heirs would take and enjoy the property at Palani as full and beneficial owners absolutely. (vii) The settlors had no right to revoke the deed. From the above provisions, we have to find out whether the settlor had intended to create an interest in favour of Gopalakrishnan or his heirs and Radhakrishnan or his heirs in praesenti. Mr. A. N. Rangaswami, learned counsel for the department, stressed the following feature present in the document, in addition to the three features referred to already. He submitted that the settlors have imposed a restriction on themselves to the effect that they will only enjoy the properties for their lifetime and they will not in any way alienate or encumber the property. We are of the opinion that this by itself will not conclude the question in favour of the contention of the department. It is admitted that in the dispositive clauses 1 to 6 in the document there is nothing to show that any interest in praesenti was created in favour of either of the two sons or their heirs. However, Mr. Rangaswami relied on the earlier portion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Road, Theagaraya Nagar, Madras, absolutely as full owners. Similarly, clause 5 states that after the lifetime of the second settlee, C. T. Radhakrishnan, his heirs shall take and enjoy house and ground No. 2, Vadagiri Street, Adivaram, Palani, absolutely as full owners. Therefore, with regard to the second settlor, namely, the wife of the first settlor, the provision is for the continuance of the enjoyment of the property as before and with regard to the two sons, the provision is for their taking and enjoying the property after the lifetime of the settlors, and with regard to the heirs of these two sons the provision is that they will take and enjoy the properties absolutely after the lifetime of their respective fathers. Therefore, from these provisions it is indisputably clear that there is absolutely no disposition in praesenti of any interest whatever in favour of any one of the settlees. Consequently, simply as a matter of construction of the document, we come to the conclusion that, there being no provision in the document for transferring any interest in the immovable properties dealt with thereunder in favour of any one of the parties in praesenti, notwithstanding the fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion there was a gift in favour of the assessee's son which was liable to tax, its value was determined at Rs. 17,757 after deducting Rs. 12,725 representing the value of the life interest of the assessee's wife. The contention of the assessee that the value of Rs. 17,757 of the gifted property was not liable to tax as the donee was not entitled to the possession and enjoyment of his interest in the year of assessment was rejected by the Gift-tax Officer, who subjected that gift to tax. On appeal, the Appellate Assistant Commissioner upheld the contention of the assessee and allowed the appeal. Aggrieved by that decision, the Gift-tax Officer preferred an appeal to the Income-tax Appellate Tribunal which reversed the finding of the Appellate Assistant Commissioner and restored the assessment order. Hence, at the instance of the assessee, this reference has been made." Having set out the facts thus, the court proceeded to state : " Sri K. B. Krishnamurthy, the learned counsel for the assessee, contended that the transfer of interest in the settled property in so far as the son is concerned does not amount to 'gift' within the meaning of the Act, as there was no right to the don ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... half of the properties which on his death passed on to her as his mother. The argument that was advanced on behalf of Bakiam, the son of Raju, who died after Meenakshisundaram, before this court was that under the deed of settlement, Raju and Meenakshisundaram obtained no interest in the corpus of the property, but what they obtained was only an interest for life in the usufruct, the corpus being reserved for their children who were to take it as a class when the time for distribution came, which, under the document, was fixed to be the time of the death of the survivor amongst the two grandsons ; and as at that time there was no one living answering the description as regular issue of Raju and Meenakshisundaram except the appellant (Bakiam) he alone would be entitled to the properties under the settlement. It was this contention that was considered and dealt with by this court, and there was no controversy as to whether the document constituted a will or a gift. As a matter of fact, that question could not have arisen, because admittedly the disputes arose after the death of Alagayee, the parson who executed the document, and, therefore, the controversy related only to the terms o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deals with the meaning of the expression "transfer of property" wherever that expression is used in this statute and that is clear from the opening portion of section 2. Sub-section (xxii) of section 2 defines " property " separately and sub-section (xxiv) of section 2 defines the expression "transfer of property". Consequently, the provision will apply only for construing the expression "transfer of property" occurring in any particular section of the Act, and in this case our attention has not been drawn to any provision in the Act relevant to the discussion in question containing the expression "transfer of property" so that we can construe that expression in the light of the definition in section 2(xxiv)(d) of the Act and hold that the document in question constitutes a gift. Secondly, section 2(xxiv)(d) itself shows that it must be a transaction entered into by a person with intent to diminish directly or indirectly the value of his own property and to increase the value of the property of any other person. That assumes that there must be properties belonging to two persons and one of them should enter into a transaction so as to diminish the value of his property with the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of a deed of assignment (tamliknama) so that it may witness in future. Dated 28th June 1871." The nature of this document came up for consideration before the Judicial Committee which held that the transaction in question was a will. The Judicial Committee observed as follows : " The reasons for considering it to be a will are these : It answers the definition of a will which is contained in setion 2 of Act 1 of 1869. It was registered as a will ; and though that may have been done at the instance of the Registrar, it certainly was done with the full knowledge and assent of Maharaj Singh. It provides for contingencies which are not ascertainable, or may not be ascertained, until the death of the testator : for instance, the contingency of his having a child, which he had not at the time of the will, and the contingency of his leaving a widow surviving him. It does not purport to give to anybody any possessory or present interest until the death of Maharaj, the donor. And it makes a gift to the children of Maharaj, which, if it be a deed of transfer operating at once, cannot take effect, because no child was in existence ; whereas, if it is a will, the gift may perfectly well t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the one advanced before us, namely, that the provision contained in the document reserving a life interest in the property to the donor is indicative of the transaction being a gift, the court observed as follows : The fact that the document purports to reserve a life interest in the property to the donor is an argument against its being a will, but as was pointed out by the Privy Council in Thakur Ishri Singh v. Thakur Baldeo Singh [1884] ILR 10 Cal 792 (PC) no great attention need be paid to that, because it is a frequent thing in this country to find documents which are in fact wills in terms making clear that the person disposing of the property reserves a life or immediate interest in the property." After referring to the fact that the various things to consider in arriving at a decision as to whether a document is a will or a gift are discussed in that judgment at page 606, the Bench of this court proceeded to observe as follows : " The document before their Lordships was very different to this, but there were certain matters in common between the two which were relied upon by their Lordships, and, in particular, the fact that the document in that case did not purport ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d continue to enjoy the property." If we may say so with respect, the above observations clearly apply to the present case also. It remains to refer only to one unreported decision rendered by one of us, namely, Panchalai Ammal v. Muniraj (Second Appeals Nos. 645 and 646 of 1968--judgment dated 8th September, 1971). In that case also, a document came up for consideration as to whether it was a will or not. The document was styled is a settlement and it has been stamped and registered as a settlement and there was no power of revocation reserved in the document. Notwithstanding these features, having regard to the language of the document it was held that it constituted only a testamentary disposition. The relevant provisions consisted of two sentences. In the first sentence, it was even stated that the property was settled and possession was given. But the subsequent statement made it clear that the settlee will have to look after the settlor during his lifetime and after his death should enjoy the property absolutely by paying the taxes due to the Government. It was held that the second sentence in the document made it absolutely clear that the settlee was to take the property ..... X X X X Extracts X X X X X X X X Extracts X X X X
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