GOLI ESWARIAH vs. COMMISSIONER OF GIFT TAX, ANDHRA PRADESH
What did the Supreme Court hold?
The Supreme Court allowed the appeal, holding that the declaration by which the assessee impressed the character of joint Hindu family property on his self-acquired properties did not amount to a 'transfer' so as to attract the provisions of the Gift Tax Act, 1958. The Court reasoned that Section 2(xxiv)(d) contemplates a 'transaction entered into' by one person with another, requiring at least two parties. The act of throwing self-acquired property into the common stock by a coparcener is a unilateral act, not a transaction with the family, even though the family is considered a 'person' under the Act. The Court also held that the word 'disposition' in Section 2(xxiv), when read in context with words like 'conveyance, assignment, settlement', refers to a bilateral or multilateral act, not a unilateral one. Abandoning or destroying property would not be considered a gift under the Act. The Court agreed with the principle that when separate property is impressed with the character of coparcenary property by a coparcener's volition, it is a unilateral action, not a transfer. The High Court's judgment was set aside.
What were the facts?
The appellant, Goli Eswaraiah, was the karta of his Hindu Joint Family. For the assessment year 1959-60, he owned self-acquired movable and immovable properties. By a deed dated December 9, 1957, he declared these properties as part of the common stock of his Hindu Joint Family. The Gift Tax Officer considered this act a taxable gift. After proceedings before lower authorities, the matter was referred to the High Court of Andhra Pradesh. The High Court, following its earlier decision in Commissioner of Income-tax, Hyderabad v. C. Satyanarayanamurthy, held that the act amounted to a 'transfer' under Section 2(xxiv)(d) of the Gift Tax Act, 1958, and thus a gift under Sections 2(xii) and 4(a) of the Act. The assessee appealed to the Supreme Court.
What were the issues?
1. Whether the declaration by which the assessee impressed the character of joint Hindu family property on his self-acquired properties amounts to a 'transfer' so as to attract the provisions of the Gift Tax Act, 1958, specifically under Section 2(xxiv)(d) thereof. Assessee's arguments: The assessee contended that his act of throwing self-acquired properties into the common stock did not constitute a gift under the Act. He argued that this was a unilateral act of a coparcener renouncing individual rights and impressing property with the character of joint family property, not a transaction with another person. He relied on the principle that such an act does not involve a donor and donee and does not require acceptance, citing cases like M. K. Stremann v. Commissioner of Income-tax, Madras. Revenue's arguments: The Revenue argued that the act constituted a 'transaction' under Section 2(xxiv)(d) of the Act, intended to diminish the value of his own property and increase that of the joint family. They also contended that the act could be considered a 'disposition' under the main part of Section 2(xxiv), as defined in the context of the Act. The High Court had supported these contentions.
Which sections of the Income-tax Act were involved?
2(xxiv)(d), 2(xii), 4(a), 2(xxiv)
AI-generated summary — verify with the full judgment below
522 GOLI ESWARIAH v. COMMISSIONER OJ[ GIFT TAX, ANDHRA PRADESH May 5, 1970 [J. C. SHAH AND K. S. HEGDE, JJ.] Gift Tax Act 18 of 1958, s. 2(xxiv) (d)-Transfer of property-Hindu throwing separate property into joint family stock-His act whe1ha amounts to 'tmnsacrion' within the meaning of sub-cf. (d)-Whether amounts to 'transfer of property' liable to be treated as 'gift' under ss. ~(xii) & 4(a) of the Act-Word 'disposition' ins. 2(xxiv), meaning of.
The appellant owned certain self-acquired properties which by a deed Jated December 9, 1957 he threw into 'the common stock of his Hindu Joint Family.
The Gift Tax Officer held that he had thereby made a gift t<rxable under the Gift Tax Act, 1958. After proceedings before the authorities ur.der the Act the question whe_ther the appellant had made 'transfer' of the property so as to attract the provisions of the Act was re- ferred to the High Court of Andhra Pradesh. Following its earlier deci- sion in Satymrarayanamurthy's case the High Court held that the act of .the appellant r1mounted to a 'trans'fer' within the te'fms of s. 2(xxiv) (d) of the Act and therefore was a gift such as envisaged in s. 2(xii) and
The order continues below.
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