1983 (11) TMI 145 - AT - Income Tax

Tribunal Upholds Controller's Order, Invalid Will Deemed, Oral Gift Validated, Agricultural Lands Excluded

Assistant Controller Of Estate Duty. Versus Smt. Khairunnisa Begum.

The Tribunal dismissed the department's appeal, upholding the Appellate Controller's order. The will dated 1-1-1967 was deemed invalid under Mohammedan ... Agricultural Land Issues Involved:1. Validity of the will executed on 1-1-1967 under Mohammedan law.2. Validity of the oral gift (HIBA) made on 2-4-1970 under Mohammedan law.3. Delivery of possession of the gifted property.4. Applicability of gift-tax on the gifted property.5. Valuation of the gifted property for estate duty assessment.Issue-wise Detailed Analysis:1. Validity of the Will Executed on 1-1-1967 Under Mohammedan Law:The Appellate Controller concluded that the will executed on 1-1-1967 is not a valid will under Mohammedan law. This conclusion is based on the principle that a bequest to an heir is not valid unless other heirs consent to the bequest after the testator's death. Moreover, Mohammedan law restricts a person from bequeathing more than one-third of their estate by will without the consent of the heirs. The will in question did not meet these requirements, and it was also considered revoked by implication when the deceased made an oral gift of the same properties later. Thus, the will was deemed invalid.2. Validity of the Oral Gift (HIBA) Made on 2-4-1970 Under Mohammedan Law:The Appellate Controller found the oral gift (HIBA) made on 2-4-1970 to be valid under Mohammedan law. The conditions for a valid gift under sections 149 and 150 of Mohammedan law include (1) a declaration of gift by the donor, (2) acceptance of the gift by the donee, and (3) delivery of possession. The evidence presented, including affidavits and witness testimonies, supported that these conditions were met. The gift was declared, accepted, and possession was delivered as required by Mohammedan law.3. Delivery of Possession of the Gifted Property:The delivery of possession is crucial for the validity of a gift under Mohammedan law. The Appellate Controller noted that the possession of the agricultural lands was handed over to the donees, and this was supported by oral evidence and affidavits. Additionally, exceptions to the requirement of physical delivery of possession were considered, such as gifts between spouses and gifts from a father to minor children, where legal possession suffices. The delivery of possession was deemed valid in this case.4. Applicability of Gift-Tax on the Gifted Property:The Assistant Controller initially contended that the gift was not valid and thus subject to gift-tax. However, the Appellate Controller ruled that the oral gift was valid under Mohammedan law and, therefore, not subject to gift-tax. The gift was completed with the required delivery of possession, making it exempt from gift-tax as per the applicable legal provisions.5. Valuation of the Gifted Property for Estate Duty Assessment:The Assistant Controller had valued the land at Rs. 1,85,000 based on inquiries with the registration department. However, since the Appellate Controller found the oral gift to be valid, the value of the gifted agricultural lands (6 acres 15 guntas) was excluded from the estate duty assessment. The Tribunal upheld this valuation exclusion, agreeing with the Appellate Controller's decision.Conclusion:The Tribunal dismissed the department's appeal, upholding the Appellate Controller's order. The will dated 1-1-1967 was deemed invalid under Mohammedan law, and the oral gift made on 2-4-1970 was validated. Consequently, the value of Rs. 1,85,000 for the agricultural lands was excluded from the estate duty assessment.