H. R. KHANNA, C. J. (Oral)

( 1 ) THE following question has been referred to this Court under section 26 (1) of the Gift Tax Act, 1958 :-

"whether on the facts and in the circumstances of the case, the act of throwing self acquired property by the asses- sees into common hotchpotch of the Hindu undivided family with the intention of abandoning their rights in that property amounted to a gift within the meaning of the term gifts as defined in the Gift-tax Act, 1958 ?"

( 2 ) THE case relates to two assessees Shrimati Sharbati Devi and Munshi Lal. The assessment yr concerned is 1965-66 corresponding to the previous year which ended on March 31, 1965. The two assessees held one-half share each in a building situated in Ram Nagar, Delhi. During the previous year, each of the two assessees impressed his or her share in the said property with the character of joint family property. Question arose whether the assessees were liable to pay gift tax because of their impressing their shares in the property with the character of joint family property. The Gift Tax Office? and the Appellate Assistant Commissioner decided the matter against the assessees and held that they were liable to pay gift tax. On further appeal to the Appellate Tribunal the Tribunal held that the assessees were not liable to pay gift tax as the act of the assessees in throwing their individual share in the joint family hotchpotch did not amount to gift within the meaning of the Gift Tax Act. The question reproduced above was thereafter referred to this Court at the instance of the Commissioner of Gift Tax.

( 3 ) WE have heard Mr. Sharma on behalf of the Revenue and Mr. Mohan Bihari Lal on behalf of the assessees, and are of the opinion that the question referred to this Court should be answered in the negative and in favour of the assessees. The matter is concluded by the decision of the Supreme Court in the case of Goli Eswariuh v. Commissioner of Gift-tax, A. P. , (1970) 76 ITR 675 (1 Hedge. J , speaking for the Court in that case, observed :

( 4 ) IT must be remembered that a Hindu family is not a creature of a contract. As observed by this court Malesappa Bandeppa v. Desai Mallappa, (1961) 3 SCR 779 (2), the doctrine of throwing into the common stock inevitably postulates that the owner of separate property is a coparcener who has an interest in the coparcenary property and desires to blend his separate property with the coparcenary property. The existence of a coparcenary is absolutely necessary before a coparcener can throw into the common stock his selfacquired properties. The separate property of a member of a joint Hindu family may be impressed with the character of joint family property if it is voluntarily thrown by him into the common stock with the intention of abandoning his separate claim therein. The separate property of a Hindu ceases to be separate property and acquires the characteristics of joint family or ancestral property not by any physical mixing with his joint family or his ancestral property but by his own volition and intention by his waiving and surrendering his separate rights in it as separate property. The act by which the coparcener throws his separate property in the common stock is a unilateral act. There is no question of either the family rejecting or accepting it. By his individual volition he renounces his individual right in that property and treats it as a property of the family. No longer he declares his intention to treat his self-acquired property as that of the joint family property, the property assumes the character of joint family property. The doctrine of throwing into the common stock is a doctrine peculiar to the Mitakshara school of Hindu law. When a coparcener throws his separate property into the common stock, he makes no gift under Chapter VII of the Transfer of Property Act. In such a case there is no donor or donee. Further, no question of acceptance of the property thrown into the common stock arises".

( 5 ) THE

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