1981 (4) TMI 92 - HC - Income Tax

Registration of Gift Deed Key for Tax Liability under G.T. Act, 1958

The High Court of Gujarat determined that a gift of immovable property becomes complete for gift-tax liability under the G.T. Act, 1958, upon registration ... Completion of gift of immovable property - chargeability to gift-tax - requirement of registered instrument for transfer - relation-back under section 47 of the Registration ActCompletion of gift of immovable property - requirement of registered instrument for transfer - chargeability to gift-tax - relation-back under section 47 of the Registration Act - A gift of immovable property is complete for the purposes of the G.T. Act only when effected by a registered instrument as required by law, and the date of registration determines the year in which gifttax is chargeable. - HELD THAT: - Section 122 read with section 123 of the Transfer of Property Act requires that a transfer by way of gift of immovable property be effected by a registered instrument; hence a transaction of gift is not complete in law merely on execution of a deed if registration (and other conditions) remain unfulfilled. The argument that section 47 of the Registration Act makes the title relate back to the date of execution was considered and rejected on the authority of the Supreme Court in Ram Saran Lall v. Mst. Domini Kuer and Hiralal Agrawal v. Rampadarath Singh, which hold that section 47 does not declare when a transfer is complete but only resolves priorities between registered instruments and does not make an unregistered transfer complete prior to registration. Applying those principles, the Tribunal correctly held that the deed executed earlier but registered subsequently became complete only on registration and that the liability to gifttax falls in the assessment year determined by the registration date.The Tribunal was right to treat the gift as complete only on registration and to uphold assessment to gifttax in the relevant assessment year determined by the date of registration.Final Conclusion: Reference answered in favour of the revenue; the Tribunal's view that the gift of immovable property became complete only on registration (and hence was exigible to gifttax in the assessment year corresponding to the registration date) is upheld. Reference disposed of; no order as to costs. Issues involved: Determination of when a gift of immovable property becomes complete for the purpose of gift-tax liability under the G.T. Act, 1958.Summary:The High Court of Gujarat addressed the issue of when a gift of immovable property becomes complete for the purpose of gift-tax liability under the G.T. Act, 1958. The question was whether the gift becomes complete upon execution of the gift deed or upon its registration. The GTO contended that the gift becomes complete upon registration, while the AAC held that the date of execution of the gift deed was relevant. The Tribunal sided with the GTO, leading to a reference to the High Court by the assessee.The court analyzed Section 122 of the Transfer of Property Act, 1882, which allows for a gift of immovable property through a registered instrument. It was noted that the transaction of gift would be complete only when a registered document is executed, as per Sections 122 and 123 of the Act. The court also considered Section 47 of the Registration Act, 1908, which allows a registered document to operate from a date earlier than its registration. Previous Supreme Court decisions were cited to explain the scope and impact of Section 47.Referring to Supreme Court judgments in similar cases, the High Court upheld the view taken by the Tribunal. It was concluded that the gift was completed only upon the registration of the deed, falling within the relevant previous year for assessment. The court answered the question in favor of the revenue and disposed of the reference without costs.