Law:

Section:

Section 3, read with section 5(1) of the Gift-tax Act, 1958 - Gift-tax - Chargeable as - Assessment year 1959-60 - Assessee and his minor son constituted a HUF which owned shares in house property and business assets in India, Burma and Penang - Later a partition took place in family and assessee retained certain cash with him and balance family assets were allotted to share of minor son - GTO taking view that half share of assessee had been transferred to his minor son without consideration brought value of residue to tax - On appeal, AAC held that immovable property in question was situated outside territories of India which was exempt under section 5(1) and, accordingly, directed GTO to make due allowance for it - Whether since joint family only owned a share in foreign firm which owned immovable property in question, section 5(1) had no application and allowance granted in respect of said property could not be sustained - Held, yes FACTS The assessee and his minor son, constituted a HUF. The family owned shares in house properties and business assets and outstanding due in this country and also shares in partnership business in Burma and Penang, the total of which was valued at Rs. 9,08,000 as on 2-9-1958. On that date, there was a partition, in terms of the partition deed. The assessee retained Rs. 70,000 in cash with him and the balance of the family assets was allotted to the share of the minor son. Though the assessee retained for himself the sum of Rs. 70,000, he undertook to discharge a registered mortgage due from the family, a sum of Rs. 20,000. For the relevant assessment year, the assessee filed a 'nil return' for purposes of the Gift-tax Act. But, on the view that the half share of the father, deducting Rs. 70,000 retained with him, had been transferred to the minor son without consideration in money or money's worth, the GTO brought the value of the residue, a sum of Rs. 3,84,000 to tax. On appeal by the assessee, the AAC agreed with the GTO that the transaction amounted to a gift, but considered that, as the immovable properties worth Rs. 3,61,300 was situated outside the territories of India, they were exempt under section 5(1) from charge. On…

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