Arijit Pasayat, C.J.
These two references are disposed of by a common order.
Following questions have been referred for opinion of this court u/s 256(1) of the Income Tax Act, 1961 (hereinafter referred to as the Act) by the Income Tax Appellate Tribunal Delhi Bench B, New Delhi (hereinafter referred to as the Tribunal) :
"(i) Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that by entry dated 1-1-1972, in the ledger of the firm reading to be treated as HUF from 1-1-1972 the assessed had given a gift of his capital and share in Sagar & Co. to his own HUF ?
(ii) Whether, on the facts and in the circumstances the Tribunal was correct in holding that the said gift was validly accepted ?
(iii) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the provisions of section 64(2) of the Income Tax Act were not applicable to the assessees case ?"
Dispute relates to the assessment years 1973-74 and 1974-75.
2. assessed, who was previously assessed as an individual in respect of share income from a firm M/s Sagar & Co. did not show any income from the share income as an individual and claimed that he had made a gift on 1-1-1972, of the balance outstanding in the books of the firm as also the interest amount in favor of the Hindu Undivided Family (hereinafter referred to as the HUF), with himself as Karta and his wife and three sons as members thereof. Two affidavits were filed on 6-1-1974. In his affidavit, reference was made to the gift. In affidavit filed by his wife Smt. Shama Suri acceptance of the gift was highlighted. To substantiate the plea, a reference was made to the ledger account, which indicated that the capital amount was to be treated as HUF account with effect from 1-1-1972. The Income Tax Officer did not accept the plea and held that this was merely a camouflage and by unilateral declaration no gift could have been made. Matter was carried in appeal before the Appellate Assistant Commissioner of Income Tax. Said authority on consideration of the materials on record accepted assessees stand. For the assessment year 1974-75 also, in view of the decision for the assessment year 1973-74, assessees claim was held to be allowed. Appeal for the assessment year 1974-75 was heard along with the one relating to the assessment year 1971-72. Revenue preferred three appeals before the Tribunal. Main question that was urged before the Tribunal was whether there was a gift and if there was a gift whether provisions of section 64(2) would have any application. Analysing the factual position, the Tribunal held that in fact there was a gift. So far as section 64(2) is concerned, it was held that the said provision has no application to the facts of the case as the assessment years involved are 1973-74 and 1974-75.
3. On being moved for reference questions as set out above have been referred. We have heard learned counsel for the parties. According to learned counsel for the revenue, the factual position has not been analysed in its proper perspective and Therefore, the conclusion of the Tribunal factually do give rise to a question of law.
4. We find that Tribunal formulated the issues to be as follows :
(1) "whether the entries were made on 1-1-1972;
(2) whether the individual property was thereby converted into HUF property by unilateral declaration by the assessed;
(3) whether it got converted into HUF property by a bilateral gift;
(4) whether the gift was valid; and
(5) if it was a gift whether section 4(1)(a) of the Wealth Tax Act and section 64(2) of the Income Tax Act would not apply to it."
5. Tribunal recorded a finding that the entries were made on 1-1-1972 With reference to the affidavits filed and the entries made, it was noticed that the assessees claim that he had gifted his capital account and share in the firm is substantiated. It was further found that as is the usual practice, when Karta is the donor another member of the HUF is to accept the gift. In the facts of the case, because the sons were minor the wife accepted the gift. Alternatively, it was pointed out that the Karta in a different capacity could have accepted the gift also. In any event, the gift was valid. These conclusions are essentially factual giving rise to no question of law. So the first two questions are answered in the affirmative in favor of the assessed and against the revenue. So far as 3rd question is concerned, it is fairly accepted by the learned counsel for the revenue that till assessment year 1979-80, the amount is to be assessed in the hands of the family and not that of the individual. Therefore, the conclusions of the Tribunal are in order. Third question is also answered in the affirmative, in favor of the assessed and against the revenue.
References are accordingly disposed of.
