Law:

Section:

Section 4 of the Income-tax Act, 1961 - Income - Chargeable as - Assessment year 1967-68 - Nawab transferred a piece of land to S - Contents of gift deed clearly mentioned that since S in his capacity as general attorney served donor honestly and faithfully, donor developed true and natural love and affection with him and gifted said land to him - There was no contractual or legal obligation on part of Nawab to pay any remuneration to 'S' nor S had any legal right to receive remuneration - Further, revenue had placed no material to show that said transaction was not by way of gift - Whether transaction in question was a gift and not remuneration paid by Nawab to 'S' for services rendered by him as general attorney - Held, yes FACTS 'S' was a member of the assessee-HUF. In respect of a piece of land transferred by the Nawab in favour of 'S', the ITO included its value as the income of the assessee-HUF holding that the said land was conveyed in token of service rendered by 'S' in his capacity as a general attorney. On appeal, the AAC accepted the assessee's plea that the land in question was gifted to the assessee-HUF by the Nawab in token of his love and affection. On Revenue's appeal, the Tribunal observed that if the assessee had not been appointed as general attorney and worked to the entire satisfaction of the Nawab, the question of gift would never have arisen and held that the so-called gift was primarily a payment in lieu of the services rendered by the assessee to the Nawab as his general attorney and accordingly, held the said amount to be taxable income of the assessee-HUF. On reference: HELD The contents of the gift deed clearly mentioned that since 'S' in his capacity as general attorney served the donor honestly and faithfully and it was because of the honesty and faithfulness that the donor developed true and natural love and affection with him and out of this love and affection, he gifted the land in question to 'S'. The plain reading of the deed would show that the transaction in question was a gift. Merely because 'S' served the Nawab in the capacity of general attorney, was no ground to hold that the transaction in question was not a gift. If…

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