TaxTMI 
TaxTMI 
1991 (8) TMI 149
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....ing their proper education. Such gifts were accepted by Mrs. Chunni, the mother of the minors, on their behalf and subsequently the transfer of the gifted properties was evidenced by execution of three gift deeds on 31-12-82 by the assessee. The gifted properties were on the tenancy of M/s ld. Mohd. Nizamuddin, Tonk (wherein the assessee was a partner) and of Punjab National Bank. 3. In each of the three years under consideration the gifted property yielded rental income of Rs. 13,500. In his return for assessment year 1983-84 the assessee had shown rental income of Rs. 2,100 from the building let out to Punjab National Bank and he had been assessed accordingly. For assessment years 1984-85 and 1985-86 no rental income from the gifted properties had been shown by the assessee in his returns and he was not, accordingly, assessed thereat. The ITO, therefore, was of the opinion that it was by reason of the omission or failure on the part of the assessee to disclose truly and fully all material facts regarding the property income of the minors that income of Rs. 11,400 in assessment year 1983-84 and Rs. 13,500 in each of the two subsequent assessment years, which was chargeable to t....
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....sessee to his minor children and since the wealth represented by the gifted properties was not includible in the wealth of the assessee under the provisions of Wealth-tax Act, 1957, the income therefrom was also not includible in the hands of the assessee. At one stage of his argument Mr. Gargieya even submitted that since the gifts were not evidenced with registered transfer deeds, as was required by the provisions of the Indian Registration Act, the transfer of capital asset was not complete and therefore income from the gifted properties was not includible in the hands of the assessee under section 64(1)(v) of the Act. Reliance in this behalf was placed on the case of CIT v. Motilal Ramswaroop [1970] 76 ITR 43 (Raj.). We, however, find force in Departmental Representative's argument. 7. First we would like to avail of this opportunity to remove the misconception on the part of the learned DC (A) with regard to the applicability of the relevant provisions of Mohammedan Law to this case and the effect of the provisions of Transfer of Property Act or of the Indian Registration Act either on the gifts made under Mohammedan Law or on taxability of the income from the gifted proper....
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...." Transfer ", as given in section 2(47) of the Act, the charging section under the Act would come into play and exemption from charge of income-tax could be claimed with reference to the provisions of the Act only. 10. In the instant case gifts of certain properties made by the assessee in favour of his three minor sons is an admitted position. It cannot be disputed that the gifts so made involved transfer of capital asset by the assessee to his sons within the meaning of the terms defined in section 2(47). There is no dispute on the point that during the years under consideration the minors had derived incomes from the gifted properties. On these facts the express provisions of Section 64(1)(v), reproduced below, obviously come into operation and the incomes, as mentioned above, was rightly subjected to tax by the ITO : " 64. (1) In computing the total income of any individual, there shall be included all such income as arises directly or indirectly--- (v) subject to the provisions of clause (i) of section 27, in a case not falling under clause (iii) of this sub-section, to a minor child (not being a married daughter) of such individual, from assets transferred directly o....
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....h after 1st April, 1972 and the proviso to section 4(1)(vi) even if be held to be applicable, would provide no help to the assessee. 14. The case of CIT v. Motilal Ramswaroop involved altogether a different point and situation. In the case the Karta of an HUF had gifted an amount of Rs. 4 lakhs to seven divided members of the family. The ITO held that the Karta was not competent to make gift and he, therefore, included the gifted property as well as interest thereon in the hands of the donor, the Karta. The Tribunal had held that the gift was not void and directed the ITO to exclude the interest income from the gifted property from the assessment of the HUF. On reference to the High Court, both under the Gift-tax Act, 1958 and Wealth-tax Act, 1957, it was argued on behalf of Revenue that if the gift was void than title to the amount remained vested in the assessee and he was liable to pay income-tax. The High Court held that interest accrued on the gifted amount did not accrue to the assessee family for income-tax purposes on either view, whether the gift was void or voidable. There is no such situation in the instant case. Herein the gifts are not found void or voidable. Moreov....