K. A. THANIKKACHALAM, J.M.: These two appeals filed by two different assessee relate to asst. yr. 1979-80. assessee are brothers. Since question involved in these appeals is common they are taken together and disposed of by this common order for sake of convenience. 2. According to facts of this case, originally on 4th Jan., 1951 Shri O. T. O. S. Thenappa Chettiar had three sons, namely Serva Shri O. S. T. M. Meyyappan, O. S. T. S. Swaminathan and O. S. T. C. Chinniah. They constituted n HUF among themselves. partition was effected among these persons on 4th Jan., 1951 by which large extent of foreign agricultural lands were allotted to three sons. Subsequent to partition two more sons were born to said Thenappa Chettiar, viz. Shri O. T. S. Velayutham and Shri O. S. T. Kaliappan. At time of partition on 4th Jan., 1951, Velayutham was in his mother s womb. Shri Kaliappan was born after partition dt. 4th Jan., 1951 to Karta of bigger HUF with intention of providing some properties to 4th and 5th sons, namely Velayutham and Kaliappan, family arrangement was entered into on 30th March, 1979 amongst father and 5 sons by which first three sons have agreed to give Rs. 1 lakh each to 4th and 5th sons in addition to certain foreign agricultural assets allotted to them. assessee herein, O. S. T. S. Swaminathan and O. S. T. C. Chinniah were representing their respective HUF s. In response to notice under s. 13(2), assessee have filed returns admitting NIL as total of taxable gift made. According to GTO assessee have given away part of their properties by way of reopening of original partition deed to their brothers S. Shri Velayutham and Kaliappan. In so far as property allotted to Shri Velayutham is concerned, GTO accepted that re-opening of original partition and allotting certain shares to said Velayutham will not come under purview of GT Act because said Velayutham was in his mother s womb at time where original partition took place on 4th Jan., 1951. But, however in case of properties allotted to Kaliappan are concerned, GTO was of view that shares allotted to Kaliappan by assessee herein will definitely come under purview of GT Act. Because according to GTO last born son Kaliappan can claim any share property that belongs to his father after original partition and he cannot claim any share from his brothers who were already separated from larger HUF and obtained their shares through partition dt. 4th Jan., 1951. Under those circumstances, GTO held as under : "Sec. 309 of Principles of Hindu Law states that son who was in his mother s womb at time of partition is entitled to have share though born after partition and hence he is entitled to have partition re-opened if no share was allotted to him originally. Hence in this case, Sri Velayutham is entitled to have partition reopened since no share was reserved for him at time of original partition. However, Sri Kaliappan was born after partition to whom provision are not applicable, Sri Kaliappan is entitled to have share only from his father s property and is not entitled to any share in properties allotted to his first three brothers. Hence any movable or immovable properties given away by assessee in favour of Sri O. S. T. Kaliappan even though by means of family agreement attract provisions of GT Act. In addition to cash gift of Rs. 1 lakh was made and he has also been allotted agricultural estates in Malaysia. Since gift of foreign immovable properties situated outside Indian territories by any person is exempt from tax. Only cash gift of Rs. 1 lakh is liable to gift-tax. total gift is computed at Rs. 1 lakh and taxable gift being Rs. 95,000." This was order passed by GTO in each of assessee case. On appeal AAC agreed with view taken by GTO in both assessee s case. 3. Not satisfied with order passed by AAC, assessee filed present appeals before Tribunal contending that authorities below should have held that family arrangement has been arrived at in order to avoid future disputes and litigations between members of family and to give quietus to existing disputes between members. It was further submitted that authorities below have not appreciated fact that partial partition dt. 4th Jan., 1951 is fraud and co-parceners who participated in said partition have taken undue advantage and partition could be reopened and legitimate shares could be allotted to various coparceners. Therefore, it was submitted that family arrangement was made to avoid further disputes and litigations amongst members of family and, therefore, there is no element of gift in transaction. We have also heard ld. Departmental Representative who supported he order of AAC. 4. We have already set out facts in detail. At time when partition was effected on 4th Jan., 1951 Thenappa Chettiar had 3 sons, namely S/Shri Meyyappan, Swaminathan and Chinniah. On that date Velayutham was in his mother s womb. last son Kaliappan was born after said partition on 4th Jan., 1951, S/Shri Velaputham and Kaliappan were all along contending that other members of bigger HUF obtained unfair advantage in partial partition effected on 4th Jan., 1951 and said partition was fraud committed on father Thenappa Chettiar and hence said partition has to be re- opened. Hence on this ground there was constant in-fighting between sons and their father Shri Thenappa Chettiar. good relationship that was prevailing among sons and father was disrupted. In fact, Velayutham sent Advocate s notice to his brothers and his father on 11th Sept., 1978 demanding his share from joint family and also for re-opening of original partition that took place on 4th Jan., 1951. In order to avoid prolonged litigation that may arise in future and so settle matter amicably family arrangement was arrived at between assessee, their father and other brothers. 5. Accordingly Deed of family arrangement was executed on 30th March, 1979 between father Thenappa Chettiar and his sons. said deed of family arrangement states as under : "Whereas parties 1 to 6 were members of joint Hindu family and party No. 1 was Karta of said joint family; whereas by Deed of Partition, parties 1 to 4 effected partial partition of assets of joint family on 4th Jan., 1951 while party No. 5 was in his mother s womb and party No. 6 was not then born. Whereas no share was reserved for party No. 5 in said partition and therefore party No. 5 is demanding share in properties partitioned on 4th Jan., 1951. Whereas parties 5 & 6 are contending that properties with high value and which could appreciate enormously were allotted to parties 2 to 4 and only properties of meagre value were allotted to party No. 1 and thereby parties 5 and 6 have been deprived of their proper and rightful share and in effect said partition was unequal and parties 2 to 4 have acquired unfair advantage in said division of property through deceitful influence exercised by mother of parties 2 to 6 who was stated to be guardian of parties 2 to 4 at time of said partition effected on 4th Jan., 1951 whereas there has been constant infighting between members of family due to these causes. Whereas in order to avoid prolonged litigation and course of law and to settle matters amicably and also to maintain peace among member of family, this family arrangement has been arrived at by parties. Whereas parties have effected entries in books of accounts relating to reallotment of share in properties on and have recorded their understanding through this Deed of Family Arrangement." Parties 2, 3, 4 have given agricultural lands situated at Alorstar, Kedah, Malaysia from lands allotted to them in Partition effected on 4th Jan., 1951 to parties 5 and 6 as per Schedule noted below: S. Name of Grand To Area No. Party No. whom given O.S.T.M. 5- O.S.T. 1. 54142 Meyyappan 399-44 Velayutham 5- . . 54140 . 213-00 5- O.S.T. . "" 54139 366-00 Kaliappan 5- . . 54141 . 255-00 O.S.T.S. 12- O.S.T. 2. 55281 Swaminathan 096-60 Velayutham 10- . "" 55283 . 028-60 2- O.S.T. . . 55284 078-20 Kaliappan O.S.T.C. 13- O.S.T. 3. 50771 3. 50771 Chinniah 185-48 Velayutham 11- O.S.T. . "" 1870 453-00 Kaliappan Parties 2, 3, 4 shall each given Rs. 1,00,000 to each of parties 5 and 6 as cash. said payment of cash shall be made by parties 2, 3 & 4 to parties 5 & 6 within 3 years (three years). In event of failure to pay said amounts within stipulated time, parties 2 to 4 shall pay respective amounts with interest at 3 per cent per annum from 1st April, 1982." 6 . It is under these circumstances assessee herein gave Rs. 1 lakh each to said Kaliappan which was subjected to gift-tax by authorities below. 7 . On these facts learned counsel appearing for assessee submitted that what was allotted to Kaliappan through Family arrangement cannot be made as subject matter in gift-tax proceedings. In other words, according to learned counsel sum of Rs. 1 lakh given to said Kaliappan by each of assessee herein through said family arrangement cannot be brought to tax under GT Act. In this respect our attention was drawn to passage occurring in Mullah sHindu Law,14th Edn. said passage runs as under : "Family arrangement or Family Settlement. In 192 and 193 subject of family arrangement and compromise by widow has been dealt with, Family arrangement or Family Settlement as it is sometimes termed generally meets with approval of Court and Court always leans in favour of transaction relating to any such arrangement which ensures peace and goodwill among family members. This does not rest on any special rule of Hindu law but flows from general principles and policy of law. Though conflict of legal claimsin praesentior in future is generally regarded as condition for validity of family arrangement, it is not necessarily so. EvenBona fidedispute, present or possible, which may not involve future claims will suffice. Member of joint Hindu Family may, to maintain peace or to bring about harmony in family, enter into such family arrangement. transaction is not creation of interest. IN such arrangement originally, each party take share of interest in property by virtue of independent title which is admitted to that extent by other parties. But every party who takes benefit under it need not necessarily be shown to have, under law, claim share in property. All that is necessary to is that parties are related to each other in some way and have possible claim or some other ground as, say affection." While dealing with family settlement, Supreme Court inRam Charan Das vs. Girija Nandini Devi AIR 1966 SC 323observed as under : "Court give effect to family settlement upon broad and general ground that its object is to settle existing or future disputes regarding property amongst members of family. word family in this context is not to be understood in narrow sense but as being group of persons who are recognised in law as having right of succession or having claim to share in property in dispute." 8. following passage appearing in text of this judgment (supra) also needs special mention: "The transaction of family settlement entered into by parties who are members of familyBona fideto put end to dispute among themselves, is not transfer. It is not also creation of interest. For, in family settlement each party takes share in property is admitted to that extent by other parties. Every party who takes benefit under it need not necessarily be shown to have, under law, claim to share in property. All that is necessary to show is that parties are related to each other in some way and have possible claim to property or claim or even semblance of claim on some other ground as, may, affection." 9 . In this context there is also another decision of Supreme Court inCWT vs. H. H. Vijayaba Dowager Maharani Saheb of Bhavnagar Palace (1979) 10 CTR (SC) 91 : (1979) 117 ITR 784 (SC).In this case on death of her husband to settle dispute between her two sons, assessee agreed to make good claim of "S" her younger son to extent to which it was not made good by "V" her elder son. "S" was to be given Rs. 30 lakhs in this regard. assessee transferred was stock worth Rs. 11 lakhs to "S" on 12th Sept., 1959. On these facts Supreme Court held that this was clearly case of family settlement or family arrangement binding on parties. It was argued before Supreme Court that agreement of assessee to pay deficit to "S" was without consideration and hence void under s. 25 of Contract Act. This Supreme Court categorically held that assessee agreed to purchase peace for family, and that it is well established that such consideration is good consideration which bring about enforceable agreement between parties and consequently is not hit by s. 25 of Contract Act. 10. In CGT vs. Ram Kishan (1979) 120 ITR 589 (All)the Karta of HUF executed six different documents called deeds of gifts in favour of each of his five sons and one widow of his pre-deceased son. GTO assessed market value of these lands as gift. Tribunal held that transaction was family settlement by partial partition and hence there is no gift tax liability. High Court concurred with this view and held that transfer could not validly be called deeds of gifts and hence no gift tax is leviable. 1 1 . Supreme Court in case ofKale & Ors. vs. Dy. Director of Consolidation AIR 1976 SC 807held that family arrangement may be oral and if there is memorandum which is only record of settlement entered into orally earlier, it does not required registration even if it involves immovable property. 12. ld. counsel appearing for assessee also relied upon decision of ITAT, Hyderabad Bench in case ofGTO vs. Bhupati Veerabhadra Rao (1984) 9 ITD 618 (Hyd)wherein on similar facts as arising in this case Tribunal after considering law on subject held that when properties are allotted tot he members of joint family in settlement to avoid future disputes no gift tax is exigible. To this effect there is also another decision of Tribunal in case ofGTO vs. Smt. Chinthamani Achi (1983) 4 ITD 237 (Mad).In case ofBhupati Veerabhadra Rao(supra) Tribunal has also taken note of judgment of Madras High Court inCGT vs. K. V. K. Veerappa Chettiar (1980) 121 ITR 854 (Mad)andCGT vs. Pappathi Anri (1981) 127 ITR 655 (Mad). 13. Considering facts arising in this case in light of decisions of various Courts and earlier orders of Tribunal as settled above, we are of opinion that sum of Rs. 1 lakh given by each of assessee to said Kaliappan through family arrangement will not be hit by GT Act. Accordingly, we set aside gift-tax assessment made by authorities below in case assessee herein and allow appeals filed by assessee. *** O. S. T. C. CHINNIAH v. GIFT-TAX OFFICER