Bona fide family settlement and unregistered memorandum: no deemed gift arose, and no compulsory registration was required.

A bona fide family settlement among co-owners was treated as outside the deeming provision for gift under section 4(1)(c) of the Gift-tax Act, 1958, because the Tribunal found as a fact that the arrangement was genuine and intended to resolve disputes, and that finding was not shown to be perverse. A memorandum recording an already completed family arrangement did not require compulsory registration, because it did not itself create, declare, assign, limit or extinguish rights in immovable property. The writing was only evidentiary and for convenience, so no registrable transfer arose.

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Issues: (i) Whether the arrangement between co-owners amounted to a bona fide settlement so as to exclude deeming of a gift under section 4(1)(c) of the Gift-tax Act, 1958; (ii) Whether the memorandum recording the family arrangement required compulsory registration.

Issue (i): Whether the arrangement between co-owners amounted to a bona fide settlement so as to exclude deeming of a gift under section 4(1)(c) of the Gift-tax Act, 1958

Analysis: Section 4(1)(c) applies only where release, surrender, forfeiture, abandonment or similar transfer of an interest in property is not found to be bona fide by the Assessing Officer. The Tribunal examined the family settlement and recorded a factual finding that the arrangement was genuine and bona fide, intended to resolve disputes and avoid future misunderstandings among the co-owners. That finding was not shown to be perverse or to give rise to any referable question of law.

Conclusion: The arrangement was bona fide and no referable question of law arose on the gift-tax issue.

Issue (ii): Whether the memorandum recording the family arrangement required compulsory registration

Analysis: A family arrangement may be oral and does not require registration unless the terms are reduced into a document that itself creates, declares, assigns, limits or extinguishes rights in immovable property. A mere memorandum prepared after an already completed arrangement, for record or convenience, is not compulsorily registrable. On the facts found, the writing was only a memorandum of an earlier settlement and did not itself effect any transfer of rights.

Conclusion: The memorandum did not require registration.

Final Conclusion: The petition failed because the Tribunal's factual finding of bona fide family settlement stood undisturbed and the document was only a memorandum not attracting compulsory registration.

Ratio Decidendi: A surrender or abandonment of property interest is not deemed to be a gift under section 4(1)(c) of the Gift-tax Act, 1958 if it forms part of a bona fide family settlement, and a mere memorandum of an already completed family arrangement does not require compulsory registration.

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