Registered instrument required for immovable property gift; mere possession or unregistered compromise memo cannot create taxable transfer.

Gift-tax on immovable property applied only if a completed gift arose in the relevant previous year, and a valid gift required compliance with section 123 of the Transfer of Property Act through a registered instrument duly signed and attested. Mere delivery of possession was insufficient to create a valid transfer. A compromise decree that was only declaratory of pre-existing rights did not itself create a taxable gift; if it created rights in immovable property, registration was still required and an unregistered compromise memo could not effect the transfer. On either view, the statutory requirements for a completed gift were not met, and the gift-tax assessment could not be sustained.

---

---

Issues: Whether a gift of immovable property arose in the relevant previous year so as to attract gift-tax, and whether the alleged gift in 1956 or the compromise decree of 18 April 1966 constituted the taxable transfer.

Analysis: Gift-tax under section 3 of the Gift-tax Act applies only to gifts made during the previous year, and a gift of immovable property must satisfy section 123 of the Transfer of Property Act by a registered instrument signed and attested as required by law. Mere delivery of possession without a registered instrument does not create a valid gift. If the compromise decree was only declaratory of pre-existing rights, no taxable transfer arose in the relevant year; if it created rights in immovable property, registration was still necessary and the unregistered compromise memo could not effect a valid transfer. On either footing, the statutory requirements for a completed gift were not met.

Conclusion: No valid gift was effected in the relevant previous year, and the assessment to gift-tax could not be sustained.

---