1985 (2) TMI 26 - HC - Income Tax

Summary

Issues Involved:
1. Validity of the gift of outhouses of the building "Deep Shikha" by the assessee to his wife under the Gift-tax Act, 1958.
2. Applicability of the Transfer of Property Act and the Registration Act to the Gift-tax Act.

Summary:

Issue 1: Validity of the Gift under the Gift-tax Act, 1958
- The Tribunal held that no valid gift of the outhouses was made by the assessee to his wife as the declaration was not registered as required by section 17 of the Registration Act and section 123 of the Transfer of Property Act.
- The assessee argued that the gift was valid for the purposes of the Gift-tax Act even if it was not registered, relying on G. V. Krishna Rao v. First Addl. GTO [1968] 70 ITR 812 (AP).
- The Tribunal relied on Smt. Laxmibai Narayana Rao Nerlekar v. CGT [1967] 65 ITR 19 (Mys) and held that there would be no gift of immovable property without a registered deed.
- The court found that the Gift-tax Act is a self-contained code and did not adopt the definition of "gift" from the Transfer of Property Act. The definition of "gift" under section 2(xii) of the Gift-tax Act is broader and includes various transactions detailed in section 4(1) and (2) of the Gift-tax Act.
- The court concluded that a gift which may be invalid under the Transfer of Property Act may still be valid under the Gift-tax Act if it falls within the definition of "gift" given in the Gift-tax Act.

Issue 2: Applicability of the Transfer of Property Act and the Registration Act to the Gift-tax Act
- The court noted that the Gift-tax Act includes certain transfers as gifts for the purposes of the Act, even if they do not meet the requirements of the Transfer of Property Act.
- The court referred to the Supreme Court's decision in Goli Easwariah v. CGT [1970] 76 ITR 675, which held that the unilateral declaration of a Hindu coparcener does not amount to a transfer so as to attract the provisions of the Gift-tax Act.
- The court found that the definitions of "gift" and "transfer of property" under the Transfer of Property Act and the Gift-tax Act are different, and the Gift-tax Act has not borrowed these definitions from the Transfer of Property Act.
- The court held that the Tribunal was not justified in holding that no valid gift was made by the assessee to his wife under the Gift-tax Act, 1958.

Conclusion:
- The reference was answered in the negative, in favor of the assessee and against the Revenue, holding that the Tribunal was not justified in law in holding that no valid gift of the outhouses was made by the assessee to his wife in terms of the Gift-tax Act, 1958.