Law:

Section:

Section 3 of the Gift-tax Act, 1958, read with section 8 of the Hindu Succession Act, 1956 - Gift - Chargeable as - Whether separate property of a Hindu devolves as his separate self-acquired property on his heirs and dose not pass by servirorship even if he happens to be joint - Held, yes - Deceased left certain amount which was his self acquired property in his account of partnership business at time of his death - Said amount was inherited by his heir - Whether on division of said amount between heirs and his three sons, there was a gift of heir to his three sons which was assessable to gift tax - Held, yes FACTS At the time of the deceased's death there was an amount standing to his credit in firms book, in which he was partner. Subsequently, it was shown as equally divided between his son 'G' and his three sons and the amount was transferred accordingly to the individual accounts. The GTO held that since 'G' allowed three-fourths of the amount to be credited to his three sons, he had made a gift to his sons and after allowing the statutory exemption he determined the taxable gift. On appeal AAC and on further appeal, the Tribunal upheld the decision of the GTO. On reference : HELD So far as separate property of a Hindu is concerned, it devolves as his separate self-acquired property on his heirs and does not pass by survivorship even if he happens to be joint. Hence, the view taken by the members of the Appellate Tribunal that after the passing of the Hindu Succession Act the law is changed does not appear to be sound, because even before the Act the separate property devolved on the heirs of the individual concerned. Hence, in view of the findings of the court below on the facts that amount left by 'S' at the time of his death in his account of the partnership business was his self-acquired property, it was held that the Tribunal was right in holding that the amount inherited by 'G' from his deceased father under section 8 of the Hindu Succession Act, 1956 and on the division of the aforesaid amount, between 'G' and his three sons, there was a gift of a 'G' to his three sons which was assessable to gift-tax. Note: The case was decided against the…

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