Gift-tax on immovable property arises only on registered transfer, not on possession or unregistered arrangements.

For gift-tax purposes, a transfer of immovable property is complete only when executed through a registered instrument under the statutory scheme in the Gift-tax Act read with section 123 of the Transfer of Property Act. Mere agreement to sell, delivery of possession, part performance, or adjustment of consideration does not by itself complete the transfer. The extended concept of transfer under section 53A of the Transfer of Property Act does not alter this position. On the facts discussed, the property transfer was completed only on execution and registration of the sale deed in November 1989, so the deemed gift arose at that time and was taxable in assessment year 1990-91.

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Issues: Whether the transfer of the immovable property and the deemed gift under the Gift-tax Act arose on the execution and registration of the sale deed in November 1989 or on the earlier dates when possession was said to have been delivered and consideration adjusted.

Analysis: For a gift of immovable property to be complete, the statutory scheme under sections 2(xii), 2(xxiv) and 4(1)(a) of the Gift-tax Act, read with section 123 of the Transfer of Property Act, requires a completed transfer by a registered instrument. Mere agreement to sell, delivery of possession, or part performance does not by itself complete the transfer for gift-tax purposes. The extended concept of transfer under section 53A of the Transfer of Property Act was held not to alter the position under the Gift-tax Act. On the facts, the property was transferred only when the sale deed was executed and registered in November 1989.

Conclusion: The deemed gift arose in November 1989 and was rightly brought to tax in assessment year 1990-91, in favour of Revenue.

Ratio Decidendi: In the case of immovable property, gift-tax liability arises only when the transfer is completed in law by a registered instrument, and not on mere delivery of possession or unregistered arrangements.

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