Judgment

HEGDE, J.: Both these appeals by the Commissioner of Gift Tax arise from the same judgment. The former one is by certificate and the latter by special leave. Civil Appeal No. 1341 of 1971 came to be filed because the certificate given by the High Court not being supported by any reason, the appeal brought on the strength of that certificate (Civil Appeal No. 128 of 1969) became unsustainable. That is why instead of one appeal, there are two appeals before us in respect of the same decision.

2. The decision appealed againes was rendered by the High Court of Madras in its advisory jurisdiction, in a reference under S. 26 (1) of the Gift Tax Act, 1958 (to be hereinafter referred to as the Act). The Income Tax Appellate Tribunal, Madras Bench referred the question, "Whether there was gift by N. S. Getti Chettiar of Rupees 2,46,377 on which he is liable to pay gift tax" to the High Court seeking its opinion. The High Court answered that question in the negative. The Commissioner of Gift Tax not being satisfied with that decision has brought these appeals.

3. The facts of the case are not many though the question of law arising for decision is by no means easy. The respondent, N. S. Getti Chettiar (who will hereinafter be referred to as the assessee) was the karta of his undivided Hindu family consisting of himself, his son Govindaraju Chettiar and six sons of the said Govindaraju Chettiar. There was a partition of the immovable properties of the family through a registered deed executed on January 17, 1958 and the movable properties were divided on April 13, 1958 on which date the necessary entries in the account books were made. The assessee claimed recognition of that partition under S. 25A of the Act. That was granted by the Department on November 29, 1958. The total value of the properties so divided was Rupees 8,51,440/- but under that partition the assessee took properties worth only. Rs. 1,78,343/-. The remaining properties were allotted to his son and grandsons.

4. The Gift Tax Officer overruling the objection of the assessee, came to the conclusion that the assessee by allotting greater share to the other members of the coparcenary than to which they were entitled, must be held to have made a girl of a portion of his share of the property to the other members and hence was liable to be taxed under the Act. He opined that the partition in question is a transaction entered into between the assessee and the members of his family with intent thereby to diminish the value of assesaees own property and increase the value of the property of his son and grandsons.

5. Aggrieved by that order, the assessee went up in appeal to the Appellate Assistant Commissioner. The Appellate Assistant Commissioner held that as no member of an undivided Hindu family had a definite share in the family assets, on partition, when the joint enjoyment came to an end, there was no need to have arithmetical equality between the shares of the various coparceners. He accordingly field that the assessee was not liable to pay any gift tax in respect of the properties that fell to the shares of his son and grandsons. The Department appealed against this decision to the tribunal. It was contended before the Tribunal that the transaction in question came within S. 2 (xii) and Section 2 (xxiv); in particular it came within cl. (d) of S. 2 (xxiv), as property included any interest in property and partition constituted a transaction; the assessee had, by relinquishing a partion of what was his due, transferred such interest and properties in favour of the other members of the family for no consideration and consequently the Gift Tax was properly leviable. This contention was not accepted by the Tribunal. It held that the interest that the assessee had in his Hindu Undivided Family property was not definable, and therefore S. 2 (xxiv) was not attracted to the facts of the case.

6. The High Court agreed with the conclusions reached by the Assistant Appellate Co