TMI Blog1977 (7) TMI 46X X X X Extracts X X X X X X X X Extracts X X X X ..... also offered to be purchased for Rs. 300. Clause 9 of the letter contains one of the terms on the basis of which the offer to purchase was made and it runs as under : " 9. The conveyance shall be prepared in my/our name or names or in the name of such person or persons as may with his/their consent in writing be directed by me/us." Clause 10 of the terms provides that a sum of Rs. 230 was to be deposited out of which a sum of Rs. 30 was for charges for preparation of a plan and the balance towards professional costs of the legal assistant to the Corporation of Bombay. By a letter dated July 16, 1941, the Deputy Commissioner (Improvements), Bombay Municipality, sent a reply accepting the offer. On February 15, 1943, M/s. Daphtary Ferreira and Divan wrote a letter to the Estate Agent and Land Manager, Bombay Municipality, informing the Municipality that S. Rodrigues had agreed to purchase from the municipality the said two plots as a nominee of Dr. John Joseph Ferreira and Mrs. Matilda Ferreira (the assessee), who had actually paid the entire consideration monies. By this letter the attorneys requested the municipality to confirm that all the monies due and payable in respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n at an early date the two draft conveyances, which were already sent to the attorneys, for revising them. On September 19, 1956, two draft conveyances in respect of the said plots in favour of Mrs. Francisca Ferreira (which is the Christian name of Frances Ferreira) were forwarded to the Estate Agent and Land Manager for revising the same. The Estate Agent and Land Manager of the municipality by his letter dated July 4, 1957, informed the attorneys that the matter regarding the preparation of conveyances in favour of Mrs. Francisca Ferreira was taken in hand and they would be informed when they were ready. After some delay the two conveyances were actually executed on June 6, 1958. To each one of these conveyances there were three parties, namely, (1) The Municipal Corporation of Greater Bombay, (2) S. Rodrigues as confirming party and (3) Mrs. Francisca Ferreira as purchaser. Both these conveyances have been duly registered. So far as the possession of the two plots Nos. 14 and 15 was concerned, the same was handed over to the assessee some time after July 16, 1941. Plot No. 14 remained vacant. Plot No. 15 was leased out to one A. P. Bhatia for a yearly rental of Rs. 7,800. Bh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he letter dated May 10, 1954, there was nothing to show that there was a gift intended ill favour of the daughter-in-law and that the daughter-in-law could at best be the benamidar of the assessee till the actual conveyances were executed in the favour. It was also urged on behalf of the revenue that there was nothing to show that there was any transfer of possession or enjoyment of the gifted property by the daughter-in-law after 1954. The Tribunal held that the properties were actually transferred in 1954 ; that the daughter-in-law was not the benamidar and that there was no assessable gift in the relevant year. So far as the question of valuation was concerned, in view of this finding it found that it was not necessary to go into the same. However, in its order it has stated that if its decision on the quantum of valuation was necessary, the Tribunal would hold that the value that it would take in the wealth-tax appeals for that year would be the would be the value as on the date of the gift. On the basis of this order of the Tribunal for the assessment year 1959-60 for which the relevant previous year ended on March 31, 1959, the following two questions are referred to us fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Greater Bombay, (2) S. Rodrigues as confirming party, and (3) by Mrs. Francisca Ferreira as purchaser. Till these conveyances were executed, he submitted, that Mrs. Francisca Ferreira had no interest in any one of the plots or even a right to have a conveyance or any right which may be available to a legal owner of an immovable property. He emphasised that in deciding the question whether a gift took place in the year 1954 or in the year 1958, regard must be had to the following circumstances, namely, who was in possession of these plots Nos. 14 and 15 prior to the execution of the conveyance; who were receiving the rents and profits, if any, derived from the property and whether, in the absence of a proper writing, as contemplated by section 130 of the Transfer of Property Act, so as to transfer and assign an actionable claim, can it be said that any right was acquired by the daughter-in-law, Mrs. Francisca Ferreira, so as to obtain a conveyance from the municipality in her own name as a matter of right in order that she may become a full owner in respect thereof and be clothed with rights of a full owner which a legal owner will have. According to his submission, until the exec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regarded as an actionable claim then in the present case having regard to the correspondence that took place between the attorneys and the municipality in the year 1954, the provisions of section 130 of the Transfer of Property Act were fully complied with and there was an effective assignment or transfer in that year. He further submitted that the question will have to be considered whether by execution of the two conveyances on June 6, 1958, there was a gift as defined by the Gift-tax Act, 1958 (hereinafter referred to as " the Act "). At no time prior to the execution of these conveyances the assessee was the owner of either of the two plots Nos. 14 or 15 and if the assessee was not the owner of either of the two plots then by reason of the execution of the conveyances on June 6, 1958, it cannot be said that the assessee was a donor and there was a gift within the meaning of section 2(xii) of the Act. So far as question No. 2 referred to us was concerned he submitted, that the right to convey the two plots was already transferred to Mrs. Francisca Ferreira in the year 1954 and it is only the right to possession and the right to receive rents and profits that will have to be valu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments Committee to its acceptance under section 92(b) of the City of Bombay Municipal Act, 1888, having been obtained." It is common ground that along with the letter of offer and earnest amount of Rs. 3,973 was sent to the municipality and the entire balance of the price of Rs. 35,747-8-0 was paid within a short time thereafter as contemplated by the terms and conditions of the offer. After the offer was accepted by the municipality, in February, 1943, M/s. Daphtary Ferreira and Divan as attorneys of S. Rodrigues and Dr. John Joseph Ferreira and the assessee wrote a letter, inter alia, stating that S. Rodrigues who had made the offer had acted in the matter as a nominee of Dr. John Joseph Ferreira and the assessee who had actually paid the entire consideration monies. By this letter the attorneys requested that the monies that have been paid in respect of this offer for purchase of the two plots were actually paid by Dr. John Joseph Ferreira and the assessee, and they requested that two separate conveyances be arranged for plots Nos. 14 and 15 in favour of Dr. John Joseph Ferreira and the assessee, and the draft conveyances should be sent to them for their approval. The request ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... movable property' shall include land, benefits to arise out of land, and things attached to the earth, or permanently fastened to anything attached to the earth." The expression "movable property" is defined by section 3(36) of the General Clauses Act to mean "property of every description, except immovable property ". Since as provided in section 54 of the Transfer of Property Act a contract for the sale of immovable property does not, of itself, create any interest in or charge on such property, the right of the purchaser under such contract cannot be regarded as immovable property, but the definition of the words " movable property " in the General Clauses Act is a residuary definition and whatever is not immovable property is regarded as movable property. Thus, the right of a party, either a purchaser or a seller, under a contract to purchase an immovable property is a " movable property ". If Dr. John Joseph Ferreira and the assessee wanted to transfer or assign their interest under the contract to purchase these two plots in favour of their daughter-in-law, Mrs. Francisca Ferreira, then the question will have to be considered, what is the nature of such interest which i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... given or not. In view of that it is not possible for us to accept the contention of Mr. Dastur that no writing was required for transfer of whatever interest Dr. John Joseph Ferreira and the assessee had under the contract to purchase plots Nos. 14 and 15 from the municipality. The question then arises whether the right of Dr. John Joseph Ferreira and the assessee to have a conveyance in their favour has been assigned or transferred in favour of Mrs. Francisca Ferreira, their daughter-in-law. It is the contention of Mr. Dastur that such writing has been executed as a result of the correspondence that took place between the attorneys of the parties and the municipality in the year 1954. There are two letters relevant for the present purpose, namely, letter dated May 10, 1954, written by the attorneys to the Estate Agent and Land Manager, Bombay Municipal Corporation, and the reply from the Estate Agent and Land Manager dated July 27, 1954, whereby he informed the attorneys that necessary sanction to the preparation of the two conveyances in respect of plots Nos. 14 and 15 in the name of Smt. Francisca Ferreira had been obtained. It is strongly urged by Mr. Dastur that the letter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransfer of possess on and from and after that date the normal conduct would have been that rent in respect of plot No. 15 which was agreed to be let out to A. P. Bhatia would have been realised by Mrs. Francisca Ferrira. There is no such writing signed by any of these two persons transferring the right to have a conveyance under the contract to purchase these plots from the municipality and it is not possible for us to construe the letter dated May 10, 1954, as amounting to a transfer whereby the right of these two persons to have a conveyance in their favour is being transferred in favour of Mrs. Francisca Ferreira. Even apart from that, the other conduct of the parties clearly shows that by writing such letter the only request that was made to the Bombay Municipality was the one contemplated by clause 9 of the terms and conditions of the offer. If the two real purchasers intended to transfer their rights under the contract then subsisting in favour of Mrs. Francisca Ferreira one would have expected that the possession of both the plots ought to have been given to Mrs. Francisca Ferreira and so far as plot No. 15 was concerned, rent thereafter ought to have been realised by her. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exist to indicate who was in possession thereof. So far as plot No. 15 was concerned, it was agreed to be let out to A. P. Bhatia. The said plot was actually let out to A. P. Bhatia who had constructed a building thereon and had sold the flats therein on ownership basis. The annual rent of the plot was Rs. 7,800. So far as plot No. 15 is concerned there is a clear finding of fact as regards receipt of rent in respect thereof. So far as that plot is concerned, actual possession will naturally be with Bhatia who had agreed to take it on lease and had constructed a building thereon but who was in symbolic possession of that plot. The Tribunal has come to a clear finding that the rents received from the property let out to Bhatia were not enjoyed by the daughter-in-law. The receipts went into the bank account of the assessee. This continued to be the position even after the conveyances were taken in the year 1958. Even in the statement of case it is also stated that the rent of Rs. 7,800 received from A. P. Bhatia was assessed to income-tax in the hands of the assessee though it was not returned by her for the assessment year 1956-57 and thereafter. The rent receipts continued to be c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in-law to the fullest extent ". On what material this surmise is based is not stated in the order at all. Actually such surmises were made with a view to come to the conclusion that the properties were actually transferred, to the daughter-in-law in 1954, which finding of the Tribunal, in our opinion, as pointed out earlier is unsupportable. Thus, the aspects of the matter which are required to be considered for determination of question No. 1 referred to us have to be gone into on the facts and circumstances of the case as found by the Tribunal and the very receipt of the rents by the assessee right up to the date of the conveyances and even thereafter clearly indicates that not even symbolic possession of plot No. 15 was with the daughter-in-law. Referring to the cases relied upon by Mr. Dastur we shall first refer to the decision of the Bombay High Court in the case of Chimanbhai Lalbhai v. Commissioner of Income-tax [1958] 34 ITR 259. This was a case where there was a completed gift prior to the coming into force of the Act and neither the principle enunciated therein nor the findings on facts are comparable to the facts of the present case. In that case, the assessee made a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the joint family firm. This being a completed transaction much prior to the coming into force of the Act there was no question of the validity of the gift or the completeness thereof being challenged. Reliance was placed by Mr. Dastur upon the decision of Upjohn J. in Letts v. Inland Revenue Commissioners [1956] 3 All ER 588 [1957] 32 ITR (ED) 58 (Ch D). The facts of the case were as under : On the sale in 1944 of a partnership business to a company, the senior partner became entitled by virtue of the sale agreement to have issued to him or his nominees (among other shares) 7,342 five per cent. first preference shares in the company, credited as fully paid up. It was suggested to the senior partner that he might make a gift of these shares to his three children and on July 29, 1944, he signed a direction " To the directors (of the company) I ...... hereby request and authorise you to allot to the under-mentioned persons as my nominees the numbers of five per cent. first preference shares of pound 1 each in the capital of (the company) set opposite their respective names credited as fully paid up, which shares form part of the total number of similar shares which I am entitled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icipality in the year 1954 there was an assignment, whether equitable or as contemplated by section 130 of the Transfer of Property Act. As we have pointed out earlier while discussing the facts no assignment whatsoever had taken place, when a request was made indicating the desire of Dr. John Joseph Ferreira and/or the assessee to have conveyances executed in respect of the two plots in favour of the daughter-in-law. It was then urged by Mr. Dastur that by the deeds of conveyance dated June 6, 1958, there is no gift of any property in favour of the daughter-in-law. He pointed out that prior to the execution of the deeds of conveyance the assessee was not the owner of any of the two plots. Although the price of the said two plots was paid by Dr. John Joseph Ferreira and the assessee, the legal ownership thereof continued to be with the Bombay Municipal Corporation. Thus by mere execution of the deeds of coveyance both dated June 6, 1958 no property is transferred by the assessee to the daughter-in-law. There are two separate deeds of conveyance in respect of plots Nos. 14 and 15 and both of them are in similar terms. To each one of the deed of conveyance there are three parties ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t only entitled to secure actual possession wherever possible and where actual possession is not possible to secure symbolic possession, but also to have the right to income and profits of plot No. 15 which was agreed to be let out to A.P. Bhatia. Thus, the entire interest then subsisting in the purchaser under the contract of purchase was transferred by him to Mrs. Francisca Ferreira. There was no question of making any payment, to the municipality because whatever obligations the purchaser had under the contract to purchase had already been discharged somewhere in the year 1941 and the only thing that remained to be done was to have a conveyance executed in accordance with law. Thus, the beneficial interest of the purchaser under the contract to purchase is transferred by the deed of conveyance as a result of S. Rodrigues joining therein as a confirming party, and by reason of such execution of the conveyance by the three parties there is a gift within the meaning of section 2(xii) of the Act. That takes us to question No. 2 that has been referred to us for determination. That question is worded on the footing that the gift effected in the year 1958 is in respect of what proper ..... X X X X Extracts X X X X X X X X Extracts X X X X
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