Law:

Section:

JUDGMENT Varadarajan, J.—These tax cases arise out of references made at the instance of the revenue by the Income-tax Appellate Tribunal, Madras Bench —T.C. No. 189 of 1973 under section 256(1) of the Income-tax Act, 1961, and T.C. No. 113 of 1974 under section 27(1) of the Wealth-tax Act, 1957. The assessee in both the cases is one K.N. Shanmuga Sundaram. The assessment years in both the cases are 1965-66 to 1968-69. The assessee had gifted premises bearing door Nos. 8, 9 and 12, Karpagambal Nagar, Mylapore, Madras, to his three minor daughters, Padmalochani, Hamsa and Usha, respectively, by three separate documents. The recital in the gift deeds is that the gifts have been made on account of the affection which the assessee has for his minor daughters and also the duty which the assessee and his minor son owed to maintain the donees in future in conformity with their family status and dignity and also to give the minor daughters necessary marriage presents and streedhanam at the time of their marriage. The total value of the properties gifted to the three minor daughters is stated to be about Rs. 90,000. For the assessment year 1965-66, the Gift-tax Officer made a protective assessment accepting the assessee's contention that the gifts were valid. On appeal also the Appellate Assistant Commissioner held that they were valid gifts and the gift-tax had to be charged on them. There was no appeal to the Tribunal against the said order of the Appellate Assistant Commissioner. But in the income-tax assessments of the assessee, the incomes from the properties were assessed in the hands of the assessee. On appeal, the Appellate Assistant Commissioner directed the Income-tax Officer to exclude the income from the properties in view of his earlier decision about the validity of the gifts made by the assessee. The revenue took the matter in appeal before the Income-tax Appellate Tribunal and contended that the gifts to unmarried daughters were void and that the finding of the Appellate Assistant Commissioner that the income from the properties was not liable for assessment at the hands of the assessee was unsustainable. The Tribunal held that the gifts are not invalid…

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