9911796707
TMI Blog1991 (8) TMI 149X X X X Extracts X X X X X X X X Extracts X X X X ..... t and consequently erred in deleting the rental income from Hiba properties from assessee's income." The relevant facts are these : 2. By making separate oral declarations on 1-1-82 in favour of his minor sons Mr. Zahiruddin and Mohd. Zaffar and similar oral declarations on 1-12-82 in favour of his third minor son Mr. Moinuddin, the assessee had gifted certain immovable properties for the purpose of ensuring 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed properties was not correct. He accordingly deleted the additions in all the three years. 5. The learned Departmental Representative has strenuously urged that the learned DC (A) had totally misunderstood the aims and objects of the relevant provisions in different laws and his approach to the case of the assessee was not at all correct. It was urged by him that the Act has given a specific definition in Section 2(47) to the term " transfer " and such definition was in no way affected by the provisions of Transfer of Property Act, the Indian Registration Act or Mohammedan Law. He further submitted that extent and purpose of the gift may be relevant considerations for applying the relevant provisions of the Gift-tax Act, 1958 but that was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 property under Income-tax Act. Mohammedan Law is applied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by an instrument, the instrument is not attested. But if the formalities are not complied with, the gift is not valid even though it may have been effected in the manner prescribed by Section 123 of the Transfer of Property Act as the provisions, of Section 123 of that Act are not applicable to gifts made under Mohammedan Law (vide section 129 of that Act). 9. A ' Hiba ' or gift under Mohammedan Law is a " transfer of property, made immediately, and without any exchange " by one person to another and accepted by or on behalf of the hater. For the purposes of taxability of the income from the gifted property the meaning of the term " Transfer " shall have to be known from the definition of the term as given in section 2(47) of the Act., On ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (vi) of Wealth-tax Act, 1957 read with the proviso thereunder, no income from the gifted property should be considered as chargeable to tax in the hands of the assesssee, as the gifted properties were not found by the Tribunal as chargeable to gift-tax on the ground of the purpose of the gift being ensuring education to the minors and as such not includible in the computation of the net wealth of the assessee, is not convincing. 12. It is not in dispute that the Tribunal in its order dated 30-5-89 passed in the gift-tax case of the assessee for assessment year 1983-84 (GTA No. 4/Jp/88) had declared the gifts in question as exempt under section 5(1)(xii) of the Gift-tax Act, 1958. Benefit of such exemption may or may not be available to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eld 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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