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TMI Blog2015 (4) TMI 908X X X X Extracts X X X X X X X X Extracts X X X X ..... entire capital gain on the sale of vacant site by investing the entire sale consideration received by acquiring another site and constructing residential house thereon. 4. U/s. 54F of the Act, where capital gain arises from transfer of any long term capital asset, not being a residential house and the assessee has within a period of three years, after the date of transfer, constructed a residential house and the entire net consideration on sale of original asset is invested for construction of residential house, then the capital gain shall not be charged to tax u/s. 45 of the Act. Proviso to section 54(1) of the Act provides that the assessee shall not own on the date of transfer of original asset, more than one residential house, other than the new asset. 5. In the course of assessment proceedings, the Assessing Officer called upon the assessee to furnish various details and particulars and the same was furnished. On verification of the documents produced the AO observed that assessee had taken two housing Loans, one from HSBC and other from ICICI Bank. Thereafter, the learned A.O. called upon the banks to furnish the information and on verification, the A.O. found that the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act was justified. 8. It was submitted that there is a property bearing No.222, 6th Main, Kadiranahalli Village, Bangalore that was originally acquired by the assessee on 05/09/2001. However, this property acquired by the assessee has not been noticed by the AO in the assessment order at all. Be that as it may, after the acquisition of the aforesaid property, the assessee had made an oral HIBA on 18/08/2008 by which, the aforesaid property was given as a gift to her daughter Ms. Rishma Sidra, minor born on 11/04/2001. The declaration of the oral Hiba is confirmed by the Affidavit in confirmation of Oral Hiba dated 18/08/2008 executed by the appellant before a Notary Public. In accordance with the principles of Sunni Mohammaden Law, the aforesaid Hiba executed by the assessee is valid and has divested the assessee of the title and ownership of the said property before the sale of the vacant site on 04/09/2008. 9. Apart from the above, it was submitted that there is another property bearing No.228, 6" Main, Illiyasnagar, Kadiranahalli Village, Bangalore, which was originally acquired by the assessee on 06/09/2003. The acquisition of this property has been noticed by the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... report mentions that the assessee had explained that one Sri Md. Anwar, Advocate, was representing the assessee's case before the AO and he was not apprised of the oral gifts (Hiba) executed on 18.8.2008. In the remand report, the AO also took a stand that the gifts of immovable property are required to be made only by a registered document. Persons, who follow the Muslim religion, can make oral gifts and such gifts are valid in law. The AO, nevertheless, took a stand that for the validity of the gift under Mohammedan law, three conditions are required to be satisfied, i.e.,(a) the declaration by the donor (offer) (b) An acceptance by the donee (acceptance) and (c) the delivery of the property (transfer). As held by many Courts, Section 129 of the Transfer of Property Act does not exempt the written gift deed executed by a Mohammedan. 1. Registration of a gift deed cannot cure a defect, as to condition of delivery of possession. 2. Mohammedan law does not dispense with the necessity for acceptance of the gift even in cases where the donees are minors. 3. The fundamental rule of Mohammedan law as to gifts is that "the donor should divest himself completely of all ownership and do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the property, which, admittedly, had not taken place. According to the ld. DR, the other circumstances regarding genuineness of the gift also need to be looked into. 18. We have given a careful consideration to the rival submissions. The first issue that needs to be answered is as to whether the gift in question is not valid for the reason that it is not effect by a registered document. In this regard, the provisions of section 123 of the Transfer of Property Act, 1882, are relevant and the same is reproduced hereunder:- "123. Transfer how effected. - For the purpose of making a gift of immovable property, the transfer must be effected by a registered instrument signed by or on behalf of the donor, and attested by at least two witnesses. For the purpose of making a gift of movable property, the transfer may be effected either by a registered instrument signed as aforesaid or by delivery. Such delivery may be made in the same way as goods sold may be delivered." 19. The assessee herein is a Muslim by religion. Under the Mohammedan Law, essentials of a gift are declaration of gift by the donor and acceptance of the gift by the donee and delivery of possession. This rule of Mohamme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ters). On this aspect, the assessee had explained before the CIT(Appeals) that the C.A. who was representing the assessee before the AO neither enquired nor was apprised about the oral gift. Further, in the course of assessment proceedings, the AO confronted the assessee only with regard to the property at No.229, Kadirenahalli Village and nothing was asked about the property No.222, Kadirenhalli Village. The assessee pointed out that before the CIT(A), the assessee also brought the facts with regard to the property No.222, Kadirenahalli Village voluntarily. The ld. Counsel for the assessee also pointed out that the statement of affairs as on 31.3.2009 filed by the assessee on which the AO placed reliance did not contain one housing loan availed by the assessee. These facts were pointed out by the assessee before the CIT(A). The loan in question was one availed from HSBC Bank and ICICI Bank respectively. The CIT(A) did not take note of the error of omission of these loans in the statement of affairs; but chose to rely only on the disclosure of asset which were claimed to be wrongly made in the statement of affairs. In our view, the explanation offered by the assessee is bona fide a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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