Law:

Section:

Section 26 of the Income-tax Act, 1961 [Corresponding to section 9(3) of the Indian Income-tax Act, 1922] - Income from house property - Co-owners - A Mahomedar Lady settled certain properties including some house properties, on her grandchildren (assessee) by a settlement deed - Settlement deed provided that properties so settled would belong to assessees in equal shares according to Mahomedan Law and it directed income to be divided, and debarred donees from disputing division, according to 'Mahomedan Law' - Whether from use of words 'Mahomedan Law' it was clear that donor did not intend her grandchildren to get undefined shares in properties inasmuch as under personal law that governed grandmother and assessees, a gift of property capable of division to two or more persons without dividing was not valid - Held, yes - Whether since as per Mohamedan Law share of female heir being half of her brother, it was to be held that shares of minors in income from house properties were definite and ascertainable as contemplated under section 9(3) of 1922 Act - Held, yes FACTS A Mahomedan lady settled certain properties, including some house properties, on her seven grandchildren (assessees) by a settlement deed. Said deed provided that the properties so settled would belong to the minor children alive and those who may be born to their parents thereafter, in equal shares according to Mahomedan law. The ITO held that the shares of the grandchildren were not determined and, therefore, they could not take advantage of section 9(3) of the 1922 Act. The AAC as well as the Tribunal also found the shares of the persons in the properties not to be ascertainable and, therefore, dismissed the respective appeals. On reference: HELD It cannot be disputed that if the donees be held to have got shares which are definite, the provision of section 9(3) would become applicable. It is equally well settled that, under the personal law that governed the grandmother and her grandchildren, a gift of property capable of division to two or more persons without dividing was not valid. It followed that the donees should get or obtain possession of definite shares in order to become donees. The…

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