# COMMISSIONER OF GIFT TAX, MADRAS v. N. S. GETTY CHETTIAR

- **Citation:** [1972] 1 S.C.R. 736
- **Court:** Supreme Court of India
- **Decided:** 1971-09-16
- **Case number:** Civil Appeals Nos. 128 of 1968
- **Bench:** K. S. Hegde, A. N. Grover
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/commissioner-of-gift-tax-madras-v-n-s-getty-chettiar-5443
- **Pages:** 8

## Headnote

A
Gift Tax Act, 1958-Section 2(xii) and 2(xxiv)-Coparcener taking
B
lesser share and allotting greater
share to other
members-If makes
"gift"-Partition, if "transfer of property".
In a partition of the properties of a joint Hindu Undivided Family a
coparcener took as his share less than what he was entitled to and allotted
greater share to the other members of the coparoenery. On the question
whether the coparoener could be held to have made a "gift" of a portion
of his share of the property to the other members and w"' liable to tax
C
under the Gift Tax Act, 1958.
HELD : (i) A coparcener in a Hindu Undivided Family has no definite share in the family property.
His share gets determined only when
there is a division of status or a division by metes and bounds.
It is not
necessary that in every case of par:tition in a Hindu Undivided Family
there should first be a division in status and thereafter a division by metes
and bounds. In the present case there is no material to show that there
D
was any division of status before the properties were actually divided.
Therefo·re, it is not necessary to consider what would be the po_sition in
law if there was just a division of status and the same was followed by a
division by mete• and bounds. [738 H-739E]
(ii) The partition of the joint Hindu Family property is not a transfer
as generally understood in law.
[741-G]
Commissioner of Income-tax, Gujarat v. Keshav/al
Lallubhai Patel,
E
55 I.T.R. 637, followed.
(iii) A partition is not a "dispdsition" "conveyance" •'assignment"
"settlement"
"delivery" "payment"
"or other alienation of property"
within the meaning of those words s. 2 ( xxiv) of the Act. These words
are used as some of the modes oCtransfer of property and have to oe
understood in the setting in which those terms are used and the purpose
they are intended to serve. [742-G]
F
It cannot be considered a "transaction
entered
into by any person
with intent thereby to diminish directly or indirectly the value of his own
property and to increase the value of the property of any other person"
within the meaning of cl. (d) of s. 2(xxiv), because, a member of a Hindu
Undivided Family who has no definite share in the family property before
division cannot be said to diminish directly or indirectly the value of his
own property and to increase the value of the property of another person.
Further, the transaction referred to in cl. (d) of s. 2(xxiv) takes its colour
G
..from the main clause i.e., it must be transfer o'f property in some way.
[742 H-743 CJ
CML APPELLATE JURISDICTION: Civil Appeals Nos. 128 of
1968 and 1341 of 1971.
Appeals by certificate/ special leave from the judgment and
order dated December 10, 1965 of the Madras High Court in Tax
Case No. 65 of 1967 (Reference No. 18 of I 963).
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COMMR. GIFT TAX v. N. s. CHETTIAR (Hegde, J.)
737
Jagadish Swarup, Solicitor-General, A. N. Kirpal, R. N. Sachthey and B. D. Shar,na, for the appellant (in both the appeals).
Uttama Redd.Y and D. N. Gupta, for the respondent (in both
the appeals).

## Text

736
COMMISSIONER OF GIFT TAX, MADRAS
v.
N. S. GETTY CHETTIAR
September 16, 1971
[K. S. HEGDE AND A. N. GROVER, JJ.]
A
Gift Tax Act, 1958-Section 2(xii) and 2(xxiv)-Coparcener taking
B
lesser share and allotting greater
share to other
members-If makes
"gift"-Partition, if "transfer of property".
In a partition of the properties of a joint Hindu Undivided Family a
coparcener took as his share less than what he was entitled to and allotted
greater share to the other members of the coparoenery. On the question
whether the coparoener could be held to have made a "gift" of a portion
of his share of the property to the other members and w"' liable to tax
C
under the Gift Tax Act, 1958.
HELD : (i) A coparcener in a Hindu Undivided Family has no definite share in the family property.
His share gets determined only when
there is a division of status or a division by metes and bounds.
It is not
necessary that in every case of par:tition in a Hindu Undivided Family
there should first be a division in status and thereafter a division by metes
and bounds. In the present case there is no material to show that there
D
was any division of status before the properties were actually divided.
Therefo·re, it is not necessary to consider what would be the po_sition in
law if there was just a division of status and the same was followed by a
division by mete• and bounds. [738 H-739E]
(ii) The partition of the joint Hindu Family property is not a transfer
as generally understood in law.
[741-G]
Commissioner of Income-tax, Gujarat v. Keshav/al
Lallubhai Patel,
E
55 I.T.R. 637, followed.
(iii) A partition is not a "dispdsition" "conveyance" •'assignment"
"settlement"
"delivery" "payment"
"or other alienation of property"
within the meaning of those words s. 2 ( xxiv) of the Act. These words
are used as some of the modes oCtransfer of property and have to oe
understood in the setting in which those terms are used and the purpose
they are intended to serve. [742-G]
F
It cannot be considered a "transaction
entered
into by any person
with intent thereby to diminish directly or indirectly the value of his own
property and to increase the value of the property of any other person"
within the meaning of cl. (d) of s. 2(xxiv), because, a member of a Hindu
Undivided Family who has no definite share in the family property before
division cannot be said to diminish directly or indirectly the value of his
own property and to increase the value of the property of another person.
Further, the transaction referred to in cl. (d) of s. 2(xxiv) takes its colour
G
..from the main clause i.e., it must be transfer o'f property in some way.
[742 H-743 CJ
CML APPELLATE JURISDICTION: Civil Appeals Nos. 128 of
1968 and 1341 of 1971.
Appeals by certificate/ special leave from the judgment and
order dated December 10, 1965 of the Madras High Court in Tax
Case No. 65 of 1967 (Reference No. 18 of I 963).
H
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COMMR. GIFT TAX v. N. s. CHETTIAR (Hegde, J.)
737
Jagadish Swarup, Solicitor-General, A. N. Kirpal, R. N. Sachthey and B. D. Shar,na, for the appellant (in both the appeals).
Uttama Redd.Y and D. N. Gupta, for the respondent (in both
the appeals).
The Judgment of the Court was delivered by
Hegde, J,
Both these appeals by the Commissioner of Gift
Tax arise from the same judgment. The former one is by certificate and !he latter by special leave.
Civil Appeal No. 1341
of 1971 came to be filed because the certificate given
biy
the
High Court not being supported by any reason, the appeal brought
on the strength Qf 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.
The decision appealed against 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
Rs. 2,46,3 77 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 h'ls brought these appeals.
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 karta of his undivided Hindu family consisting of
himself, his son Govindaraj u Chettiar and six sons of the as id
Govindaraju Ci1ettiar.
There was a partition of the immovable
properties of the family through a registered deecr 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
DeRartment on November 29, 1958.
The total value of the
properties so divided was Rs. 8,51,440/- but under that partition
the assessee took properties worth only Rs. 1,78,343/C.
The
remaining properties were allotted to his son and graru!sons.
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 copatcenacy than to which
13 ~L3Sup.C.l./72
738
SUPREME COURT REPORTS
[1972] 1 S.C.R.
they were entitled, must be held to have made a 'gift' 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 parti~
tion in_ question is a transaction entered into between the assessee
and the members of his family with intent thereby to diminiSh the
value of assessee's own property and increase the value ·of the
property of his son and grandsons.
Aggrieveu by that order, the assessee went up m 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, therw was no need to
have arithmetical equality between the shares
of the various
coparceners.
He accordingly held -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 Triljunal that the transaction in question came within s. 2
(xii) ands. (ltxiv), in particular it came within cl. (d) of s. 2
(xxiv), as property included any interest in property and partition constituted a transaction; tlie assessee had, by relinquishing a
portion of what was his due, transferred such interest and properties in favour of the otlier members of the family for .no consideration and consequently the Gift Tax was properly leviable.
This contention was not accepted by the Tribupal. It held that
the interest that the assessee had in his Hindu Undivided Family
pfoperty was not definable, and therefore s. 2(xxiv) was not
attracted to the facts of the· case.
The High Court agreed with the conclusions reached by the
Assistant Appellate Conimissioner and the Tribunal. It came to
the conclusion that the partition in the family of the assessee did
not come wit!M the mischief either of s. 2(xii) or s. 2(xxiv).
It alsQ opined that under the partition, there was no deemed
'gift' as contemplated by s. 4 of the Act.
Mr. Solicitor-General appearing for the
Commissioner of
Gift Tax did not place any reliance before us on s. 4 of the Act.
Therefore we need not consider the scope of s. 4 of the Act. All
that Mr. Solicitor General contended was that the case came
either under s. 2(xii) or under s. 2(xxiv). He built up his
arguments thus :-
A partition in a H.U.F. invariably involves two steps,
first
there is a division of status and thereafter there is a division by
metes and bounds. A coparcener's share is fixed according to
law as soon as ·there is a division of status. Therefore, if at the
time of division by metes and bounds he chooses to. take a share
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COMMR. GIFT TAX v. N. s. CHETTIAR (Hegde, J.)
739
less than to which he is entitled to under law, then the same
would amount to a 'gift' of the balance of property to which he
was entitled, to the other coparceners. We are unable to agree
with Mr. Solicitor General that in every case of partition in a
H.U.F. there should first be a division of a status and thereafter
a division by metes and bounds.
There are innumerable cases
where a partition takes place without there being earlier any division of status.
Coming to the facts of the case, there
is
n(l
material before us to show that there was any division of status
before the properties were actually divided.
The Tribunal has
not found that there was any division of status
amongst
the
members of the family before they divided the properties.
The
partition deed is not before us .nor are the account books showing
the division of the movable properties is before us.
It is not
known whether under the registered partition deed, there
was
only a partial partition or a complete disruption of the family.
That being so, we have to proceed on the basis of the facts found
by the Tribunal and apply the law to the facts so found.
The
argument that there was first a division of status and the same
was followed up by a division by metes and bounds does
not
appear to have been urged before the Tribunal.
Under these
circumstances, it is not necessary for us to consider what would
be the position in law if there was ·first a division of status in a
H.U.F. and the same was followed up by division by metes and
bounds in which division one of the coparceners takes properties
less than to what he is entitled to under law.
Before proceeding to examine the relevant provisions of the
Act, it is necessary to mention that according to the true notion '
of an undivided Hindu family, no individual member of
that
family, whilst it remains undivided, can predicate of the joint and
undivided property, that he, that particular member, has a cer·
tain definite share namely a third or ~ fourth.
All the coparceners in a Hindu joint family are the joint owners of the properties of the family. So long as the family remains joint, no coparcener can predicate what his share in the joint family is. His
share gets determined only when there is a division of status or
a division by nietes and bounds. therefore it is not correct to
assume that a coparcener in Hi,ndu joint family has any definite
share in the family property, bercire its division.
Having stated
that much, let us now proceed to consider the relevant provision~
of the Act.
Section 3 of the Act is the charging section.
It says :
"Subject to the other provisions contained in this
Act, ther~ shall be charged for every assessment year
commencmg on and from the !st day of April 1958, a
'140
SUPREME COURT REPOR}'.S
(1972) l S.C.R.
tax (hereinafter referred to as gift-tax) in respect of
A
the gifts, if any, made by a person during the previous
year (other than gifts made before the
1st day of
April 1957) at the rate or rates
specified
in
tht>-
schedule."
'Giff is defined in s. 2 (xii) . That sub-clause says :
B
" "gift" means 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 of any
property deemed to be a gift under section 4."
The expression 'transfer of property' is 'defined in s. 2(xxiv)
That provision reads :
" "transfer of property" means
any
disposition,
conveyance, assignment, settlement, delivery, payment
or other alienation of property and, without limiting the
generality of the foregoing, includes-
(a) the creation of a trust in property;
(b) the grant 0r creation of any lease,
mortgage,
charge, easement, licence, power, partnership
or interest in property;
( c) the exercise of a power of appointment of property vested in any person, not the owner of
the property, to determine its disposition
in
favour of any person other than donee of
the power; and
( d) any transaction entered into by
any person
with intent thereby to diminish directly or indirectly the value of his own property and to
increase the value of the property of any other
person.~
We shall first examine whether the partition with which we
are concerned in these appeals can be considered as transfer of
property under the general law.
Therafter we ~hall proceed to
consider whether it comes within the extended meaning given to
that expression in s. 2(xxiv).
It is now setfled by the decision of this Court in Commissioner of Income-tax, Gu;arat v. Keshavlal Lallubhai Pate/(1)
that a partition of joint Hindu family properly cannot be considered as transfer in the strict sense-the sense in which all
1jej!al expressions are understood and more particularly in tax
(1) ,55 I.T.R. 637.
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COMMR. GIFT TAX v. N. s. CHETTIAR (Hegde, !.)
741
laws.
In the course of that judgment Sikri, J. (as he then was)
speaking for the Court observed :
"But, is a partition of joint Hindu family property
a transfer in the strict sense? We are of the
opinion that it is not. This was so held in Gutta Radhakrishna.vya v.· Gutta Sarasamma(1).
Subba Rao, J.,
(then a judge of the Madras High Court) after examining several authorities came to the
conclusion
that
"partition is really a process in and by ·which a joint
enjoyment is transformed into an enjoyment in severalty.
Each one of the shares had an antecedent title
and, therefore, no conveyance is involved in the process, as a conferment of a new title is not necessary."
The Madras High Court again examined the question
in M. K. Stremann v. Commissioner of Income-tax(')
with reference to section 16 ( 3) (a)( iv). It observed
that "obviously no question of transfer of assets can
arise when all th.at happens is separation in
status,
though the result of such severance in status is that
the property hitherto held by the coparcenary is held
thereafter by the separated members
as tenants-in·
common.
Subsequent partition between the divided
members of the family does not amount either to a
transfer of assets from that body of the tenants-incommon to each of such tenants-in-common."
The Punjab High Court came to the same conclusion in Jagan Nath v. State of Punifab( 8 ).
Agreeing
with these authorities, we hold that when
the
joint
Hindu family property was partitioned, there was n<'
transfer of assets wHhin section 16 ( 3 )(a)( iii) and
(iv) to the wife or the minor son."
We are bound by the ratio of that decision and if we may say
so, we respectfully agree with the statement of the law quoted
above.
Hence we hold that the partit\on in the famHY of ~e
assessee did not effect any 1transfer as generally understood m
law.
This takes us to to s. 2 ( xxiv).
The opening words of the
provision refer to 'transfer of property'.
That cfause enumerates several types of transfers and not to any other transactions.
It is also necessary to attach significance to the words "or other
alienation of property" immedialely after setting out the various
(I) I.L.R. 1951 Mad. 607.
(2) (1961) 41 I.T.R. 297.
(3) (1962) 64 P.L.R. 22.
74 2
SUPREME COURT REPORTS
[1972] I S.C.R.
1ypes of transfers. If we read the clause as a whole, it is clear
that it deals with transfer of properties in various ways.
As observed in Craies on Statute Law (6th Edn. p. 213)
that an interpretation clause which extends the meaning of a
word does not take away its ordinary meaning.
An interpretation clause is not meant to prevent the word
receiving
lts
-0rdillary, popular and natural sense whenever that would be
properly applicable, but to enable the word as used in the Act,
when there is nothing in the context or the subjeq matter to the
contrary to be applied to some things to which it would not
ordinary be applicable.
Bearing in mind these principles, let us J?.OW examine
the
scope of s. 2(xxiv).
That provision speaks of
"disposition",
"conveyance", "assignnient", "settlement", "delivery", "payment"
or "other alienation of property".
A reading of this section clearly goes to show that the words
·'disposition", "convey.ance",
"a~signment", "settlement", -'*delivery" and "payment" are used as seme of the modes of transfer
of property. The dictionary gives various meanings for those
words but those meanings do not help us.
We have to understand the meaning of thos.e words in the context in which they
are used.· Words in a section of a statute are not to be interpreted by having those words in one hand and the dictionary in
the other. In spelling out the meaning of the words in a section,
-0ne must take into consideration the setting in which those terms
are used and the purpose that they are intended to serve. If so
understood, it is clear that the word "disposi\ion" in the context
means giving away or giving up . by a person of something which
wa> his own, "conveyance" means transfer of ownership, "assignment" means the transfer oi the claim, right or property to an-
-Other, "settlement" means settling the property, right or claimconveyance or disposition of property for the benefit of another,
"delivery" contemplated therein is the delivery of one's property
to another for no consideration and "payment" implies gift of
money by someone to another. We do not think that a partition
in a H.U.F. can be considered either as "dis~osition" or "conveyance" or "assignment" or "settlement" or "delivery" or "payment" or "alienation" within the meaning of those words
in
s. 2(xxiv).
This leaves us with cl. (d) of s. 2(xxiv) which speaks of a
ti;ansaction entered into by any person with intent thereby to
diminish directly or indirectly tl]_e value of his own property and
to increase the value qf the property, of another person. A mem.
ber oLR.U.F. who, a~ .mentioned earlier, has no definite share
in the family property b~fore division, cannot be said to diminish
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COMMR. GIFT TAX v. N. s. CHETTIAR (Hegde, J.)
743
directly or indirectly the value of his property or to increase the
value of the property ef any other coparcener by agreemg to take
a share lesser than whi\t he would have got if he had gone to
court to enforce his claim. Till partition, his share in the family
property is indeterminate. He becomes entitled to a share in the
family property only after the partition.
Therefore there is no
question of his e_ither diminishing directly or indirectly the value
of his own property or of increasing the value of the property of
anyone else.
The "transaction" referred to in cl. ( d) of s. 2
(xxiv) takes its colour trom the main dause vi7.., it must b.e a
transfer of property in some way.
This conclusion of ours gets
support from sub-clause (a) to (c) of clause (xxiv) of s. 2,
each· of which deals with one or the other mode of transfer. If
the parliament intended to bring within the scope of that provision partitions of the type with which we are concerned, nothing
was easier than to say so. In interpreting tax laws, courts
merely look at the words of the section. ·If a case clearly comes
within the section, the subject is taxed and not otherwise.
For these reasons, we agree with the view taken by the
High Court of Madras, the. Tribunal and the Assistant Appellate
Commisisoner that the assessee made no "gift" under the partifion deed in question.
In the result these appeals fail.
Civil Appeal No: 1341 of
1971 is dismissed on merits and Civil Appeal No. 128 of 1969
is dismissed as being not maintainable. The assessee is entitled
to his costs-Fee one set.
K.B.N.
Appeals dismissed.