High Court Of Bombay
I. Chatterji vs. Commissioner Of Gift Tax
Section GT 2(xii)
Asst. Year 1970-71
Mrs. Sujata Manohar & T.D. Sugla, JJ.
GT Ref. No. 1 of 1976
4th June, 1990
Jahangir Mistry with N.P. Modi i/b Rustamji & Ginwala, for the Applicant : G.S. Jetly with P.S. Jetly & K.C. Sidhwa, for the Respondent
SUJATA MANOHAR, J.:
This is a reference under s. 26(1) of the GT Act, 1958. The assessee was a divorcee. He was divorced from his wife Ritha Devi, under a decree of divorce passed in January, 1969, after a marriage lasting around 19 years. After the divorce the assessee made a proposal of marriage to one Miss Shanta Sujan. The lady was 25 years younger than the assessee. The assessee had a grown up son by his first marriage. Miss Shant Sujan at this time was about 25 years of age and she was employed as a company secretary earning a monthly salary of Rs. 1,300. In these circumstances, by an indenture dt. 5th Dec., 1969 the parties agreed in writing as follows: (1) Shanta Sujan agrees to marry Indra Chatterji within three months. (2) In consideration of her having so agreed, Indra Chattarji undertakes to make over to Shanta Sujan, before the marriage, 20,000 shares of Dr. Beck & Co. (India) Ltd., of the face value of Rs. 10 each, and to have such shares registered and transferred in the books of the company. These shares thereafter will belong to her and constitute her exclusive property and Indra Chatterji shall have no right or claim to them of any kind. (3) The marriage shall be solemnised and performed according to Hindu rites. (4) The parties agree that, immediately after the marriage, they will present an application under s. 15 of the Special Marriage Act, 1954 and have the marriage registered under the Act so that the provisions thereof applied to it. (5) All gifts, whether in cash or in kind, received on the occasion of the marriage shall be the exclusive property of Shanta. As per this agreement the assessee transferred to Miss Shanta Sujan 20,000 shares of Dr. Beck & Co. (I) Ltd. The marriage was solemnised in January 1970.
2. In the asst. yr. 1970-71 for which the accounting period was the period ending on 31st March, 1970, the GTO held the transfer of these shares by the assessee to Miss Shanta Sujan as a gift within the meaning of s. 2(xii) of the GT Act, 1958. The assessee appealed against the assessment before the AAC.
3. The AAC also found that the transfer of these shares to Miss Shanta Sujan, as clearly born out by the agreement was in consideration of her promise to marry the assessee. He agreed with the GTO that a promise of marriage cannot constitute consideration in money or money’s worth and therefore the transfer would amount to a gift within the meaning of that term under the GT Act of 1958.
4. Before the AAC a further case was set up by the assessee to the effect that the transfer of shares was not merely in consideration of Miss Shanta Sujan’s promise to marry the assessee but also in consideration of her giving up her career in order to provide consortium to the assessee and to enable her to fulfil her legal obligation to maintain her dependent parents. The AAC allowed the assessee to raise these new grounds but did not permit the assessee to produce in evidence an affidavit to the above effect which was sworn by Miss Shanta Sujan.
5. From the decision of the AAC the assessee came in appeal before the Tribunal. The Tribunal upheld the finding of the AAC. From the decision of the Tribunal the following question has been referred to us for determination : “Whether on the facts and in the circumstances of the case, the transfer of 20,000 shares of Dr. Beck & Co. (India) Ltd. made by assessee in favour of Miss Shanta Sujan as per the agreement dt. 5th Dec., 1969 constituted a “gift” with the meaning of that term under the GT Act, and chargeable as such ?”
6. Under s. 2 sub-s. (xii) of the GT Act, 1958, “Gift” means “transfer by one person to another to any existing movable or immovable property made voluntarily and without consideration in money or money’s worth…….. ” We, therefore, have to decide whether in the present case the transfer of the shares in question is without consideration in money or money’s worth.
7. It was submitted by Mr. Mistri learned counsel for the assessee that in the present case the consideration was not only the promise of marriage. There was a further consideration in the form of Miss Shanta Sujan giving up her job and career. He also submitted that providing maintenance to the parents of Miss Shanta Sujan was also a consideration for the transfer of these shares. These can be looked upon as consideration in money’s worth because these can be evaluated in terms of money.
8. He relied upon a decision in the case Keshub Mahindra & Ors. vs. CGT (1968) 70 ITR 1 (Bom) : TC35R.305 in support of his submission that “consideration must be widely construed to include not merely a benefit passing from the promisee to the promisor, but also the promisee acting or refraining from acting in a certain way. Hence giving up of a career can amount to consideration for transfer of shares. It was not necessary to establish that the assessee had received any benefit by way of consideration.
9. Before we consider these submissions, we must first examine the findings of fact as stated by the Tribunal, because we cannot reopen findings of fact. In the present case the Tribunal, after having considered all the material before it, has come to a finding that the consideration for the transfer of shares by the assessee to Miss Shanta Sujan was not any agreement by Shanta Sujan to give up her job or career nor was there any material to establish that the shares were transferred to enable her to maintain her dependent parents. The Tribunal has come to a finding that in view of cl. 2 of the agreement of 5th Dec., 1969, it was clear that the transfer of shares was only in consideration of Shanta Sujan’s agreeing to marry the assessee. It has held that the submission that there were other considerations is an after thought. The Tribunal emphatically stated that when the parties had thought fit to reduce to writing the terms agreed upon between them, it is not conceivable that important terms of the agreement like the promise of giving up her career etc. for which the transfer of shares was said to have been effected, would have been omitted to be mentioned. These findings of fact are binding on us.
In fact the Tribunal has declined to frame questions Nos. 2 to 4 as proposed by the assessee at all. It has only referred to us the question of law whether the transfer of these shares as per the agreement of 5th Dec., 1969 constitutes a gift. The agreement of 5th Dec., 1969 makes no reference to all these other considerations apart from marriage. We are, therefore only required to consider whether transfer of these shares in consideration of marriage can be considered as a gift within s. 2(xii) of the GT Act. We are not required to look into other so- called considerations. A promise of marriage although it may be a valid consideration in law under the Contract Act, cannot, in our view, be considered as consideration in money or money’s worth. Various considerations may go into a promise of marriage such as natural love and affection of the parties for each other. These are not capable of being evaluated in money or money’s worth. In fact it is not seriously contended by the learned advocate for the assessee that consideration of marriage can be considered as consideration in money or money’s worth. Mr. Mistri relied upon the decisions in the case of CGT vs. J.N. Marshall (1979) 120 ITR 613 (Bom) : TC35R.329 as also CGT vs. R.M.S. Ramanathan Chettiar (1969) 74 ITR 758 (Mad) : TC35R.343. These cases in our view are not relevant to the facts of the present case.
We, therefore, agree with the reasoning of the Tribunal that the transfer of these shares is covered by the definition of âgift’ within the meaning of s. 2(xii) of the GT Act, 1958. Accordingly, we answer the question referred to us in the affirmative and in favour of the Revenue.
There will be no order as to costs in the circumstance of the case.
[Citation :185 ITR 610]