2004 (4) TMI 9 - HC - Income Tax

Gift Tax Act, 1958 - whether the gift of an immovable property is the date of document or the date of registration of the document? - Act was subsequently amended by adding an Explanation clause to section 2(xii) of the Gift-tax Act for the definition of the term gift - Explanation clause, we find, does not in any way militate against the fulfillment of the requirements of section 123 of the Transfer of Property Act for a valid gift to be made by those persons mentioned in section 27(iiia) or 27(iiib) of the Income-tax Act. - we hold that the relevant date for consideration is only the date when the document was registered. - We answer the question in favour of the Revenue and against the assessee.

Summary

Issues:
1. Determination of the date for assessing the gift of an immovable property - date of document or date of registration of the document.

Analysis:

The case involved a dispute regarding the valuation and assessment of a gifted property by the assessee in the assessment year 1988-89. The assessee had gifted a portion of land with a building to a donee under a gift deed dated February 7, 1985, which was registered later on September 30, 1987. The Assessing Officer valued the property at Rs. 10,77,240 based on a report by the Departmental Valuation Officer. The Commissioner (Appeals) accepted the assessee's plea that the gift should be assessed in the year 1985-86 when the donee was put in possession. The Income-tax Appellate Tribunal upheld this decision, stating that the assessment should be considered in the assessment year 1985-86, not 1988-89.

The primary question was whether the gift of an immovable property is determined based on the date of the document or the date of registration. Section 122 of the Transfer of Property Act defines "gift" as a transfer of property made voluntarily and without consideration. Section 123 requires a registered instrument for the gift of immovable property. The Gift-tax Act also defines "gift" and "transfer of property" in relevant sections.

The court referred to previous judgments to determine the completion of registration. The Supreme Court rulings in Ram Saran Lall v. Domini Kuer and Gomatibai v. Mattulal emphasized that registration is essential for legal transfer. The court in Thulasimani Ammal v. CIT reiterated the requirement of valid registration for gift-tax levy. It was highlighted that the transfer of property is complete only upon registration, especially concerning third parties like tax authorities.

The court rejected the assessee's argument that the gift should be assessed in 1985-86 based on the execution date, emphasizing that registration is crucial for legal transfer. The court also dismissed the contention related to the amended Explanation clause in the Gift-tax Act, clarifying that the registration date is significant for assessment. Ultimately, the court ruled in favor of the Revenue, holding that the relevant date for consideration is the date of registration of the document.

In conclusion, the judgment resolved the issue by affirming that the date of registration of the document is crucial for assessing the gift of an immovable property, emphasizing the legal significance of registration for a valid transfer under the relevant Acts and previous court rulings.