GOLI ESWARIAH versus COMMISSIONER OF GIFT TAX, ANDHRA PRADESH

Citation: [1971] 1 S.C.R. 522 · Decided: 05-05-1970 · Supreme Court of India · Bench: J.C. SHAH · Disposal: Appeal(s) allowed

Judgment (excerpt)

522 
GOLI ESWARIAH 
v. 
COMMISSIONER OJ[ GIFT TAX, ANDHRA PRADESH 
May 5, 1970 
[J. C. SHAH AND K. S. HEGDE, JJ.] 
Gift Tax Act 18 of 1958, s. 2(xxiv) (d)-Transfer of property-Hindu 
throwing separate property into joint family 
stock-His 
act 
whe1ha 
amounts to 'tmnsacrion' within the 
meaning 
of sub-cf. (d)-Whether 
amounts to 'transfer of property' 
liable to be 
treated as 'gift' 
under 
ss. ~(xii) & 4(a) of the Act-Word 'disposition' ins. 2(xxiv), meaning of. 
The appellant owned certain self-acquired properties which by a deed 
Jated December 9, 1957 he threw into 'the common stock of his Hindu 
Joint Family. 
The Gift Tax Officer held that he had thereby made 
a 
gift t<rxable under the Gift Tax Act, 1958. 
After proceedings before the 
authorities ur.der the Act the question whe_ther the appellant had made 
'transfer' of the property so as to attract the provisions of the Act was re-
ferred to the High Court of Andhra Pradesh. Following its earlier deci-
sion in Satymrarayanamurthy's case the High Court held that the act of 
.the appellant r1mounted to a 'trans'fer' within the te'fms of s. 2(xxiv) (d) of 
the Act and therefore was a gift such as envisaged in s. 2(xii) and s. 4(a) 
of the Act. 
In SCityanarayananwrthy 's case aforesaid, it had been held 
that an act similar to that of the appellant would amount to "a 'transac-
tion' entered into by any person with intent thereby to diminish directly 
or indirectly the value of his own property and to inC'rease the value of 
the property of any other person". 
With certificate 
appeal 
against the 
judgment of the High Court was filed in this Court. 
HELD : The appeal must be al!owed since the declaration by which 
the assessee had impw-essed the character of joint Hindu family property 
en the self-acquired properties owned by him did not amot'11t lo a ·transfer' 
so as to attract provisions of the Act. [529 Fl 
A 
B 
G 
D 
E 
A Hindu Joint Family is no,t a creature of contract. The doctrine of 
throwing into common sto.:k inevitably postulates that the owner of the 
separate property is a coparcener who has an interest 
in the coparcenary 
F 
property and desires to blend his separate property with the coparcenary 
prope-rty. 
The separate property of a member of a joint Hindu Family 
may he impressed with the character of Joint Family property if it is 
voluntarily thrown by him into the common stock with the intention of 
abandoning his separate claim therein. 
The act by which the coparcener 
throws his separ'atc property to the common stock is a· unilateral act. By 
his individual volition he renounces hi~ individual right in that property 
and treats it as a property of the family. 
As soon as he declares his in-
G 
tention to treat his self acquired property as that of the Joint Family, the 
property assumes the charac:er of Joint Family Property. The doctrine of 
throwing into common stock is a doctrine peculiar to the Mitakshara 
School of Hindu Law. 
When a coparcener throws his separate property 
into commo'l stock. he makes no gift under Ch. VII of the Transfer of 
H 
Property Act. 
In such a case there is no donor or donee. 
Further no 
question of accerytance of the property thrown 
into the common stock 
arises. 
[5~6 A-F] 
/ 
-
A 
B 
c 
D 
F 
G 
GOLI ESWARIAH v. COMMR. GIFT TAX ( Hegde. f.) 
52 :l 
Tt was not necessary in the present .::ase to comider whether the act of 
the assessee could be said to have '·diminished directly or indirectly the 
value of his own property and increased the value of the property" of his 
joint family, because his act could 
not he considered as a •·trans:tction 
entered into"'. Clause (d) of s. 2(xxiv) contemplate;; a "transaction enter-
ed into" by one person with another. It cannot appl~ to a unilateral :~ct. 
It m11st be an act to which two or more persons are parties. 
Even though 
under the Act the undivided ·family is a 'person' the assessee did not enter 
into any transaction with his family. 
Therefore, it was not possible to 
<~!tree with the High Court that 
the act of the assessee fell within 
ih-· 
scope of s. :!(xxiv) (d) of the Act. [52S A-Bl 
The assessee's act could also not be considered as a 'disposition' unJer 
the main part of s. 2(x:.>iv). The word 'disposition' is not a term of luw. 
Further it has no precise meaning. 
Its meaning has to be gathered from 
the context in which it is used. In the context in which the term is u~ed 
in s. 2(xxiv), it cannot mean to "dispose o"f". 
Otherwise, e

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