A.P. JAISWAL v. GIFT TAX OFFICER
[Citation -1984-LL-1205-1]

Citation 1984-LL-1205-1
Appellant Name A.P. JAISWAL
Respondent Name GIFT TAX OFFICER
Court ITAT
Relevant Act Income-tax
Date of Order 05/12/1984
Assessment Year 1981-82
Judgment View Judgment
Keyword Tags adequate consideration • immovable property • market value • gift-tax
Bot Summary: In the case of Tulsidas Kilachand, it was held by the Supreme Court that though natural love and affection or even a promise to marry may be good consideration for a contract, but it cannot be regarded as an adequate consideration. So far as the meaning of the expression 'adequate consideration' is concerned, it was, held by the Andhra Pradesh High Court in the case of Potti Veerayya Sresty that the consideration that supports the transfer should be one, the value of which can be measured in terms of money or money's worth. A mere promise t o marry, though it may be good consideration to support the validity of a contract, cannot be regarded as one for adequate consideration. Simply because the shares were transferred having regard to the obligations of the assessee under the pre-nuptial Agreement, it is not possible for us to take the view that the said shares were transferred for adequate consideration as understood in law. Section 2(xii) defines a gift as meaning the transfer by one person to another of any existing movable or immovable property made voluntarily and without consideration in money or money's worth, and includes the transfer or conversion of any property referred to in section 4 of the Act deemed to be a gift under that section. We have already seen that the said transfer of shares was without consideration in money or money's worth, since it was made for the marriage between the assessee and Miss Gayatri Malhotra. An ante-nuptial agreement or settlement made in consideration of marriage may be enforceable at law on the ground that marriage is a sufficient consideration for the settlement.


interesting question involved in this appeal, filed by assessee, is whether transfer of 50,000 equity shares of Rs. 10 each of Jagatjit Industries Ltd. made by assessee to Miss Gayatri Malhotra on 18-7-1980 was treatable as gift within meaning of section 2(xii) of Gift-tax Act, 1958 ('the Act'). 2. For assessment year 1981-82 in question, originally, assessee filed return on 27-1-1981, declaring gift of Rs. 5,87,500. Later on, he led revised return declaring nil gift. However, GTO treated transfer as gift and assessed assessee accordingly. 3. In appeal, learned Commissioner (Appeals) held that there was no adequate consideration measurable in terms of money's worth. He did not accept contention raised on behalf of assessee that there was marriage agreement or ante-nuptial agreement and that transfer of shares was by way of consideration of promise by lady to marry assessee. 4. assessee, being aggrieved, has come up in appeal before us. Shri K . Annadhanam, learned counsel for assessee, submitted that transfer of shares made by virtue of pre-nuptial agreement was not gift as it was outside ambit of Act. On other hand, Shri S.K. Bansal, l e r n e d departmental representative, kly relied upon order of Commissioner (Appeals). He also referred to following decisions: Tulsidas Kilachand v. CIT [1961] 42 ITR 1 (SC), Potti Veerayya Sresty v. CIT [1972] 85 ITR 194 (AP), CWT v. Khan Saheb Dost Mohd. Alladin [1973] 91 ITR 179 (AP) and CIT v. Vivian Bose [1979] 118 ITR 989 (Bom.). 5. We have considered rival submissions as also decisions referred to above. By means of deed dated 18-7-1980 of settlement, assessee, in consideration of Miss Gayatri Malhotra agreeing to become his life companion and to marry him under Hindu Marriage Custom, transferred 50,000 shares o f Jagatjit Industries Ltd. of face value of Rs. 10 each (their market value being Rs. 5,87,500 at rate of Rs. 11.75 per share). said amount was stated in that deed to constitute total settlement and payment for consideration for marriage between two parties. It was also stated that Miss Gayatri Malhotra would have all legal and moral rights and privileges of Hindu wife after marriage is solemnised. marriage was solemnised after said settlement on 28-1-1981. said settlement was, undoubtedly, in nature of pre-nuptial agreement. Marriage, according to Hindu law, is holy union for performance of religious duties. It is treated as 'sanskar' or as sacrament. It is not contract. In case of Tulsidas Kilachand, it was held by Supreme Court that though natural love and affection or even promise to marry may be good consideration for contract, but it cannot be regarded as adequate consideration. So far as meaning of expression 'adequate consideration' is concerned, it was, held by Andhra Pradesh High Court in case of Potti Veerayya Sresty that consideration that supports transfer should be one, value of which can be measured in terms of money or money's worth. To same effect, meaning has been assigned to expression 'adequate consideration' by Andhra Pradesh High Court in case of Khan Saheb Dost Mohd. Alladin. No decision was pointed out on behalf of assessee before us of any High Court, where different meaning may have been assigned to expression 'adequate consideration'. mere promise t o marry, though it may be good consideration to support validity of contract, cannot, therefore, be regarded as one for adequate consideration. Simply because shares were transferred having regard to obligations of assessee under pre-nuptial Agreement, it is not possible for us to take view that said shares were transferred for adequate consideration as understood in law. In case of Tulsidas Kilachand, reference was made by Supreme Court to case of P.J.P. Thomas v. CIT [1962] 44 ITR 897 (Cal.). In that case, Calcutta High Court held that where person transfers some property to woman 'in consideration of forthcoming marriage' between them, and marriage takes place, income accruing to wife from property after marriage can be included in husband's income under provisions of section 16(3)(a)(iii) of Indian Income-tax Act, 1922 ('the 1922 Act'). In that case, it was also held that since it was not possible to determine adequacy of such consideration, marriage could not be regarded as adequate consideration within meaning of section 16(3)(a)(iii). No doubt that decision was reversed by Supreme Court in appeal vide Philip John Plasket Thomas v. CIT [1963] 49 ITR 97 but on another point. Supreme Court declined to express any opinion upon interpretation put by Calcutta High Court on expression 'adequate consideration'. Section 2(xii) defines gift as meaning transfer by one person to another of any existing movable or immovable property made voluntarily and without consideration in money or money's worth, and includes transfer or conversion of any property referred to in section 4 of Act deemed to be gift under that section. word 'voluntarily' here means 'willingly without compulsion', unfettered by influence or intercession, misrepresentation or coercion, force or fraud. We have already seen that said transfer of shares was without consideration in money or money's worth, since it was made for marriage between assessee and Miss Gayatri Malhotra. Therefore, transfer in question was treatable as gift within meaning of section 2(xii). ante-nuptial agreement or settlement made in consideration of marriage may be enforceable at law on ground that marriage is sufficient consideration for settlement. But, such consideration is neither money nor money's worth and, consequently, such settlement would be liable to gift-tax. In this view of matter, therefore, learned Commissioner (Appeals) was justified in upholding taxation of transfer in question on basis of gift. We uphold his order. 6. appeal filed by assessee, accordingly, fails and is dismissed. *** A.P. JAISWAL v. GIFT TAX OFFICER
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