1990 (8) TMI 111 - HC - Income Tax

Summary

Issues:
1. Whether the Tribunal should make a reference under section 26(2) of the Gift-tax Act.
2. Determination of the effective date of the gift for assessment purposes.
3. Inclusion of the value of standing crop in the valuation of a gifted estate for gift-tax purposes.

Analysis:
1. The Revenue filed a petition seeking a direction for the Income-tax Appellate Tribunal to make a reference under section 26(2) of the Gift-tax Act. The case involved a gift of immovable properties to daughters and grandsons. The Commissioner of Gift-tax revised the assessment, concluding that the gift should have been assessed in the earlier year. The Tribunal ruled that the gift took effect in the earlier year but disallowed the inclusion of the value of the standing crop in the assessment. The High Court directed the Tribunal to refer the question of the effective date of the gift for assessment.

2. The High Court emphasized that the effective date of a gift of immovable property is a question of law based on the date of execution and registration of the gift deed. The Tribunal was obligated to refer such a question to the court for decision. The court directed the Tribunal to refer the question of whether the gift took effect on the date of possession or registration for gift-tax purposes.

3. Regarding the inclusion of the value of the standing crop in the valuation of the gifted estate for gift-tax purposes, the High Court found no legal basis for such inclusion. It was stated that in a transfer of immovable property, everything on the land is included in the land itself. Since no legal compulsion was shown for including the standing crop, the court deemed it inappropriate to call for a reference on that question.