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TMI Blog2004 (4) TMI 36X X X X Extracts X X X X X X X X Extracts X X X X ..... ording payment of full consideration and agreeing that the assessee would effect registration of the sale deed whenever required by the trust and at any rate before March 31, 1989, to the beneficiaries jointly. The sale deed, as such, was executed on November 22, 1989, by the assessee in favour of the trust, which mentioned the sale consideration as Rs. 55,000, however, the stamp duty was paid on the market value of Rs. 1,68,000. But the Sub-Registrar adopted the guideline value at Rs. 2,80,000 for stamp duty purposes. The Gift-tax Officer, invoking the provisions of section 4(1)(a) of the Gift-tax Act, 1958, treated the amount of Rs. 2,25,000 as deemed gift (the difference between the guideline value adopted by the Sub-Registrar at Rs. 2,80,000 minus the consideration of Rs. 50,000) and passed the assessment order dated September 28, 1992, levying gift-tax at Rs. 61,500. The assessee filed an appeal before the Commissioner of Income-tax (Appeals), who accepted the assessee's contention that the transfer of land took place even before the registration of the sale deed on November 22,1989, and allowed the appeal by an order dated July 16, 1993. The Revenue moved the Income-tax Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to in section 4, deemed to be a gift under that section. Explanation. - A transfer of any building or part thereof referred to in clause (iii), clause (iiia) or clause (iiib) of section 27 of the Income-tax Act by the person who is deemed under the said clause to be the owner thereof made voluntarily and without consideration in money or money's worth, shall be deemed to be a gift made by such person;" The next provision to be referred to is section 2(xxiv) of the Gift-tax Act, which explains the terms "transfer of property" as under: In this Act, unless the context otherwise requires, - 'transfer of property' means any disposition, conveyance, assignment, settlement, delivery, payment or other alienation of property .. ." Section 3 of the Gift-tax Act is to the effect that in respect of the gifts made by a person, tax would be levied. Section 4(1)(a) of the Gift-tax Act is to the following effect: "(1) For the purposes of this Act, - (a) where property is transferred otherwise than for adequate consideration, the amount by which the value of the property as on the date of the transfer and determined in the manner laid down in Schedule II, exceeds the value of the conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... place and that once the document is registered, it will relate back to the date of agreement. We have already extracted sections 2(xii), 2(xxiv) and 4(1)(a) of the Gift-tax Act in the earlier part of this judgment. Section 2 (xxiv) of the Gift-tax Act explains what is meant by transfer of property. According to the said section, not only conveyance or settlement but even delivery would amount to transfer of property. Section 4(1)(a) of the Act deals with cases where property is transferred for inadequate consideration and what should follow thereon. Taking advantage of the fact that even delivery would amount to transfer of property (section 2(xxiv)), it cannot be said that the gift was complete in this case, in the year, prior to 1989 (i.e., in 1981 or 1984). What is to be noted is that the definition of the expression "transfer of property" enlarging the meaning of transfer for the purpose of the Act also does not in any way dispense with the requirement of registration of the deed of settlement, settling an immovable property favouring a donee. Section 2(xxiv) of the Act also contemplates a bilateral transfer and unless the document transferring immovable property is validly re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cument is held to be effective against the Revenue which is not a party to the deed from the date of execution, it will entail great hardship, because the Revenue will have no knowledge of the date of execution of the document, and the document can only be effective against the Revenue from the date of registration." (b) Thulasimani Ammal v. CIT [2000] 108 Taxman 426 (Mad). In that case, the petitioner made a settlement of some of her lands in favour of her daughter on June 8, 1970, and as per the guideline value maintained by the Registration Department, the value of the land was taken as Rs. 1,20,180 for the purpose of registration of the deed. The petitioner, on the ground that the deed was executed on February 12, 1970, filed a return of gift for the assessment year 1970-71. The case of the petitioner was since the gift was made during the financial year 1969-70, the relevant assessment year for levy of tax, would be 1970-71 and there was no obligation on her part to file the return of gift for the assessment year 1971-72. The court rejected the plea of the petitioner and ruled as follows: "I am of the view that though the transaction of the gift may be regarded as valid betw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he rights of property'. The general law would take into its ambit not only the provisions of the Transfer of Property Act but would also require application of the provisions of the Registration Act. It is not necessary for us to refer to the decisions of the High Courts in this behalf except to note that the consistent view of the High Courts has been that for effecting a transfer the provisions of the Transfer of Property Act and/or the Registration Act have to be complied with. In the instant case, the High Court did not even refer to the provisions of the Registration Act and, therefore, fell in error in coming to the conclusion that the case fell within the provisions of section 4 of the Gift-tax Act and, therefore, as it was a deemed gift it was not necessary that the document had to be registered. In our view, the general law did not stand abrogated and the requirement of complying with the provisions of the Transfer of Property Act and the Registration Act had to be fulfilled. The High Court, therefore, erred in answering the question of law in the negative and against the Revenue." From the foregoing discussion, it has to be held that the Tribunal is perfectly right in i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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