Case Law Details

Case Name : ACIT Vs Bilakhia Holdings P. Ltd (ITAT Ahmedabad)
Appeal Number : ITA Nos. 981 to 985/Ahd/2009
Date of Judgement/Order : 30/05/2014
Related Assessment Year : 2001- 02
Courts : All ITAT (4535) ITAT Ahmedabad (338)

The issue before us is whether the transfer of the shares of Nestle India Ltd and Hindustan Lever Ltd held by the members of Bilakhia family as investment by them to the assessee- company as per family arrangement dated 16-02-2001 claimed to have been transferred without any monetary consideration can be held to be gift or not?

As per Transfer of Property Act 1882 section 122 gift has been defined as under:-

“Gift as a transfer of certain existing moving or immovable property made voluntarily and without consideration by one person, called the doner, to another, called the donee and accepted or on behalf of the donee.”

It is clear from the above that any transfer of any moveable or immovable property can be treated as gift only if the same is made voluntarily and without any consideration. The revenue’s contention is that since this transfer of shares by the family members to the assessee-company has been made in pursuance of a family agreement, the same cannot be called voluntary or without consideration. For making this submission reliance was placed on the decision of Supreme Court in the case of CWT vs. HH Vijayaba, Dowgner Maharani Saheb of Bhavnagar Palace (117 ITR 784) wherein it was held as under:-

“5 . Taking the totality of the facts as found by the Tribunal and mentioned in the impugned judgment of the High Court it was a case of family settlement or family arrangement which is binding on the parties concerned.

The assessee agreed to purchase peace for the family, and to pay to her son the amount which fell short of Rs. 50,00,000/- if her elder son did not pay any portion thereof. It is, well established that such a consideration is a good consideration which brings, about an enforceable agreement between the parties. Section 25 of the Contract Act does not hit this. “

It is clear from the above that Hon’ble Apex Court held that family arrangement cannot be regarded as being without consideration so as to render them unenforceable. Since it is an admitted position that family arrangement in the present case is enforceable and binding, the assessee cannot take the plea that transfer of shares by the family members to the assessee in pursuance to the family arrangement was without consideration.

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Category : Income Tax (25929)
Type : Featured (4122) Judiciary (10462)
Tags : Capital Gain (344) ITAT Judgments (4714)

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