9911796707
TMI Blog1975 (8) TMI 40X X X X Extracts X X X X X X X X Extracts X X X X ..... circumstances of the case, the Tribunal was right in holding that the provisions of section 4(1)(a) of the Gift-tax Act, 1958, were attracted and that there was a deemed gift taxable in the hands of the assessee ? (2) Whether, on the facts, the Tribunal was correct in law in holding that in considering the quantum of taxable gift under section 4(a) of the Gift-tax Act, 1958, the transfer of shares standing in the name of his minor son was not to be considered ? The following facts appear from the statement of the case. The assessment year involved is 1960-61. The deceased-assessee, late AI-Haj J. Ahmed, owned 425 shares of Khanikar Tea Estate (P.) Ltd. in his own name. Hundred shares of the said company stood in the name of his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... res. On the above facts, in the income-tax assessments, the provisions of the proviso to section 12B(2) were applied and some capital gains were worked out in the hands of the assessee. At the same time, in the gift-tax proceedings the Gift-tax Officer held that the difference between the market value of the shares and the value at which the actual transfer was made represented deemed gifts in the hands of the assessee. This order was confirmed by the Appellate Assistant Commissioner though he reduced the quantum of gift by taking a smaller market value of the shares. In appeal against the income-tax assessment the Tribunal held that the proviso to section 12B(2) was not applicable as the object of the transfer was not to avoid capita ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re also not impressed with the contention of the learned counsel for the assessee that the transactions were at arms length. The circumstances narrated above show that these shares were transferred to the sons at a consideration which was lower than the market value as the assessee wanted to have peace in his family. As the market value of the shares was definitely higher than the consideration paid for the shares the transaction has been correctly deemed to be a gift under section 4 of the Gift-tax Act. We also do not agree with the argument of the learned counsel for the assessee that in considering the quantum of gift the shares standing in the name of minor son and transferred should also be considered. But for the provision of sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which the market value of the property at the date of the transfer exceeds the value of the consideration shall be deemed to be a gift made by the transferor. In the instant case it is found from the statement of the case that the deceased-assessee, late Al-Haj J. Ahmed, was the owner of 425 shares of Khanikar Tea Estate (P.) Ltd. and these shares stood in his own name. Another 100 shares of Khanikar Tea Estate (P.) Ltd. stood in the name of his minor son, Samiruddin Ahmed. Besides these shares, there were some other shares of the said company which were owned by his wife and other sons and daughters from different wives. The deceased-assessee and his children and wife also owned certain shares of another company, namely, Ahmed Tea Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that these allotments of shares to the groups of the members of the family of late Al-Haj J. Ahmed were made for achieving peace and harmony amongst the members of the family. Thus, the arrangements are found to be family arrangements. The arrangements were based on recognition of existing rights of the individual members of the family. In Ram Charan Das v. Girja Nandini Devi AIR 1966 SC 323 the Supreme Court has observed at page 329 as follows : Courts give effect to a family settlement upon the broad and general ground that its object is to settle existing or future disputes regarding property amongst members of a family. The word ' family ' in the context is not to be understood in a narrow sense of being a group of pers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... property. All that is necessary is that the parties must be related to one another in some way and have a possible claim to the property or a claim or even a semblance of a claim on some other ground as, say affection. From the judgment of the Supreme Court in Ram Charan Das's case AIR 1966 SC 323, the following propositions emerge : The transaction of a family settlement entered into by the parties who are members of a family bona fide to put an end to the dispute among themselves, is not a transfer. It is not also the creation of an interest. For, in a family settlement each party takes a share in the property by virtue of the independent title which is admitted to that extent by the other parties. Every party who takes ben ..... X X X X Extracts X X X X X X X X Extracts X X X X
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