Gift-tax on registered transfers and separate property treatment confirmed for post-death assessment of legal representatives.

Assessment against legal representatives was treated as valid where the assessee died before completion and the sons' returns were proceeded with under the statutory post-death assessment scheme. The properties gifted were treated as the donor's separate property because the deeds described them as his own and the materials negatived coparcenary ownership, including under Mitakshara principles. For gift-tax, immovable property became effective only through registered instruments, shares were transferred in the company books, and cash gifts were made during the relevant previous year, so the gifts fell within the charging provision for the assessment year 1960-61.

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Issues: (i) Whether the assessment order passed against the six sons as legal representatives on the basis of their separate returns was valid; (ii) whether the gifted properties belonged exclusively to the donor as his separate property; (iii) whether the gifts were assessable to gift-tax in the assessment year 1960-61.

Issue (i): Whether the assessment order passed against the six sons as legal representatives on the basis of their separate returns was valid.

Analysis: The donor died before the assessment was completed, notices were issued to the sons as legal representatives, and the returns filed by them were treated as returns on behalf of the deceased. The assessment was continued against the legal representatives in accordance with the statutory scheme governing assessment and liability after death.

Conclusion: The assessment order against the six sons as legal representatives was valid and the issue was answered against the assessee.

Issue (ii): Whether the gifted properties belonged exclusively to the donor as his separate property.

Analysis: The recitals in the deeds described the lands as the donor's own property and indicated that no other person had any right or interest in them. Even on the footing of Mitakshara law, a Hindu may possess separate or self-acquired property over which he has full power of disposition. The materials therefore supported the finding that the property was not coparcenary property.

Conclusion: The gifted properties were rightly held to belong exclusively to the donor as his separate property, and the issue was answered against the assessee.

Issue (iii): Whether the gifts were assessable to gift-tax in the assessment year 1960-61.

Analysis: In the case of immovable property, a gift takes legal effect only through a registered instrument. The lands were covered by registered deeds executed in 1959, the shares were transferred in the company books in 1960, and the cash gifts were found to have been made during the relevant previous year. Gifts made in law after 1 April 1957 fell within the charging provision of the Act.

Conclusion: The gifts were assessable to gift-tax in the assessment year 1960-61, and the issue was answered against the assessee.

Final Conclusion: The reference was answered in favour of the Revenue on all three questions, sustaining the gift-tax assessment.

Ratio Decidendi: A gift of immovable property becomes effective in law only upon execution and registration of the instrument required by law, and property described and treated as the donor's own may be assessed as his separate property for gift-tax purposes.

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