TMI Blog2002 (1) TMI 283X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the transaction dated 22-11-1989 when the actual sale deed was registered in the trust. For the reasons mentioned by the Assessing Officer in the assessment order, he did not agree with the claim of the assessee. According to the Assessing Officer, the ownership title in the land passes to Ayyappa Family Trust when the actual transfer of property took place. According to him, the sale deed was executed on 22-11-1989, and registered on 28-11-1989 as document No. 3644 of 1989. Therefore, title in the land passed to the Trust only on 22-11-1989 and not before that. The Assessing Officer, therefore, considered that since the plot of land has been transferred to the transferor for inadequate consideration, the provisions of section 4(1)(a) are applicable. The assessee himself valued the property in question at Rs.1,68,000 in the document No. 3644 of 1989. The Registrar has valued the property at Rs.2,80,000 and registered the said document on 28-11-1989 after receiving the necessary additional charges from the assessee. The difference between the market value of the property at Rs.2,80,000 as well as the sale consideration of Rs.55,000 received by the assessee was assessed to gif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... definition of gift given in section 2(xii) of the Gift-tax Act and also the definition of expression 'transfer of property' as given in section 2(xxiv) and emphasised that 'transfer of property' means any disposition, conveyance, assignment, settlement, delivery, payment or other alienation of property and also include certain other transfers. The learned counsel for the assessee, therefore, stated that since delivery of property has taken place on 13-4-1981, there is no gift in 1989. He also referred to amendment to section 2(47)(v) of the Income-tax Act and 27 of the Income-tax Act as well as the Explanation inserted by the Finance Act, 1987 w.e.f. 1-4-1988. 5. We have considered the rival submissions, facts of the case and material on record. For the sake of convenience, the relevant provisions of sections 4(1)(a), 2(xii) and 2(xxiv) of the Gift-tax Act are reproduced hereunder: "4(1)(a): where property is transferred otherwise than for adequate consideration, the amount by which the market value of the property at the date of the transfer exceeds the value of the consideration shall be deemed to be a gift made by the transferor; 2(xii): 'gift' means the transfer by one p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transferred by a registered deed only. It has been held by the various High Courts in the following cases: (i) Smt. Satyabati Goswami v. CGT [1978] 113 ITR 228 (Gauhati); (ii) Smt. Padma Lalchand Mirchandani v. CIT [1981] 128 ITR 174 (Delhi); (iii) Darbar Shivrajkumar v. CGT [1981] 131 ITR 647 (Guj.); (iv) CGT v. Matilda Ferreira [1978] 112 ITR 934 (Bom.) and (v) K. Madhavakrishnan v. CGT [1980] 124 ITR 233 (Mad.). That in case of a gift of an immovable property, the effective and crucial date is the date on which the gift deed is executed and registered. The mere delivery of an immovable property is not sufficient for effecting a valid gift. Section 123 of the Transfer of Property Act, 1882, provides that, for the purpose of making a gift of immovable property, the transfer must be effected by a registered instrument signed by or on behalf of the donor and attested by at least two witnesses. The Gift-tax Act does not enact any exception to the general law as contained in section 123 of the Transfer of Property Act. Therefore, in order to effectuate a valid gift, the requirements of section 123 of the Transfer of Property Act must be complied with. 7. In the case of A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ferred on 13-4-1981, another agreement was made on 10-4-1984 between the assesee, Dr. V. Srinivasan and his wife, Mrs. Usha Srinivasan, in her capacity as trustee of Sree Ayyappa Family Trust. Vide this agreement, the assessee agreed to transfer the property before 31-3-1989 to both the beneficiaries jointly. Mere agreement does not transfer the property. Subsequently, the sale deed was executed by the assessee on 22-11-1989 under which the land in question was transferred in favour of Sree Ayyappa Family Trust consisting of two beneficiaries who are children of the beneficiaries. Since the sale deed was executed in the month of November 1989, actual transfer has taken place only in November 1989 because before that there was no transfer of property. The transfer of immovable property does not take place by mere delivery. 10. In the case of K. Madhavakrishnan, the facts are that one Srimathi Lakshmi Ammal gave agricultural land to her daughter. She died on 4-4-1971. It was claimed before the Assessing Officer by the assessee that he is not liable to gift-tax in assessment year 1967-68. The Assessing Officer had before him a compromise decree passed in O.S. No. 42 of 1966, dated 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peal of the Revenue. 11. In the result, the appeal of the Revenue is allowed. Per Shri P. Mohanarajan, Judicial Member 12. I have gone through the order of my learned Brother. With great respect, I am unable to persuade myself to concur with his point of view for the following reasons. 13. This is a case where there was an agreement between the assessee and Shri Ayyappa Family Trust in the year 1981 to sell the property to the trust on a consideration of Rs.55,000. The time to execute and register the deed of conveyance was extended in the year 1984. However, on 31-3-1984, the assessee had satisfied the consideration fixed at Rs.55,000 from the Trust. In the year 1989, the deed of conveyance was registered in the Office of the Sub-Registrar, Tiruchirappilly in Document No. 3644 of 1989. At the time of registration, the value of the property was fixed at Rs.1,68,000 for the purpose of registration, by the assessee. But, the Registrar had valued the property at Rs.2,80,000 for the purpose of registration on the basis of the guideline value and collected the deficit stamp duty. The Assessing Officer treated the difference between the value arrived at Rs.2,80,000 and the actual ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operty; (c) the exercise of a power of appointment (whether general, special or subject to any restrictions as to the persons in whose favour the appointment may be made) of property vested in any person, not the owner of the property, to determine its disposition in favour of any person other than the donee of the power; and (d) any transaction entered into by any person with intent thereby to diminish directly or indirectly the value of his own property and to increase the value of the property of any other person." This provision has to be read alongwith section 4(1)(a) of the Gift-tax Act, which reads as follows: "4(1) For the purposes of this Act,-- (a) where property is transferred otherwise than for adequate consideration, the amount by which the value of the property as on the date of the transfer and determined in the manner laid down in Schedule II, exceeds the value of the consideration shall be deemed to be a gift made by the transferor." As per the provisions of section 2(xxiv) apart from executing the conveyance, the acts of disposition, assignment, settlement, delivery, payment or other alienation of property also are considered as the act of transfer of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of the contract or of the part performance thereof." 18. A reading of this provision makes it clear that there should be certain conditions so as to attract the provisions of section 53A, which are as follows: (i) There should be a contract of sale for consideration; (ii) The contract should be in writing; (iii) The contract should be signed by the transferor or on his behalf; (iv) The contract should be in respect of immovable property; (v) The transferee should have been taken the possession of the property; and (vi) The transferee should have performed or should be willing to perform his part of contract. If all the aforesaid conditions are satisfied, the transferor is debarred from enforcing against the transferee any right in respect of the property by which the transferee has taken the possession even if the instrument of transfer is not registered, and such transfer is valid in law. In the present case, all the aforesaid conditions are prevailing. Therefore, it can be safely said that the assessee was having only a husk of title remained with him after 31-3-1984. 19. From the above, it is clear that the Legislature not only adopted the definition of tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dings on the said land and let out for rent and earned income. All these were possible on account of delivery of the possession of the land, which commenced by an agreement in 1981 and receipt of consideration in 1984. Thus, only the husk of title to the land remained with the assessee. The admitted facts are narrated in page 4 of the assessment order, which is as follows: "In the assessee's case, he is the transferor and the trust created by him is the transferee. According to the terms of unregistered agreements dated 13-4-1981 and 10-4-1984, the execution of documents transferring the land in question is to be made by assessee at any rate before 31-3-1989. Moreover, 'Clause 6' at Page 3 of the so called unregistered agreement dated 13-4-1981 expressly provides for charging of rent at the market rate, from the date of the transaction is concluded, for the space occupied by the assessee for his consulting room. From the above, it is clear that even though the trust was allowed to put up super-structure in the land belonging to the assessee as early as 1978, the title to the land has not passed till the date of first agreement. That is why Clause '6' has been included in the so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... when no such claim was made by the assessee before the Assessing Officer, or CIT (Appeals) or Tribunal? 3. Whether, the deemed gift took place-- (a) on 22-1-1989 when the sale deed was executed which was registered on 28-11-1989? or (b) took place on 31-3-1984 as per aforesaid unilateral resolution dated 31-3-1984 of the trustees of Ayyappa Family Trust, even when no such claim was made by the assessee before the Assessing Officer, or CIT (Appeals) or before the Tribunal?" THIRD MEMBER ORDER Per Shri G.E. Veerabhadrappa, Accountant Member.--On a difference of opinion between the two Members constituting the Division Bench, the following points of difference are referred to me for my opinion as third Member by the Hon'ble President acting under section 255(4) of the Income-tax Act, 1961: "1. Whether, on the facts and in the circumstances of the case, the plot of land at Trichy was transferred by the assessee-- (a) by the actual sale deed dated 28-11-1989, in view of the definition of the 'transfer of property' in section 2(xxiv) of the Gift-tax Act, as per the decision of the Hon'ble Madras High Court in the case of K. Madhavakrishnan v. CGT(124 ITR 233); or, (b) on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment year 1990-91, notwithstanding the following claims made by the assessee before the Assessing Officer: 1. The possession of the land in question had already been taken over by the trust in 1978 itself. 2. Full consideration had already been received by the assessee in the form of equipments by book adjustments on 31-3-1984. 3. The recent amendment of section 2(47)(v) of the Income-tax Act contemplates any transaction involving the allowing of possession of any immovable property to be taken or retained in part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act, 1882 and it would deem to be transfer. In the assessee's case, the possession was already given in 1978 itself and therefore no gift arises in the present transaction that took place on 22-11-1989. The Assessing Officer was of the opinion that the ownership title in the land passes to Ayyappa Family Trust when the actual transfer of property took place. According to him, the sale deed was executed on 22-11-1989 and registered on 28-11-1989 as Document No. 3644 of 1989. Therefore, title in the land passed to the trust only on 22-11-1989 and not before that. Acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ery of possession of immovable property could not by itself be treated as equivalent to conveyance of the immovable property. He further considered the effect of the decision in Late Nawab Sir Mir Osman Ali Khan's case which related to the interpretation of section 2(m) of the Wealth-tax Act where the assessee had received full consideration for sale of certain immovable properties but had not executed any registered sale deed in favour of the vendees. The assets in question was to be included in the assessee's net wealth for the purpose of assessment as they are belonging to him within the meaning of section 2(m) of the Wealth-tax Act. The learned Accountant Member further considered the fact that the first agreement executed by the assessee on 13-4-1981 was to be acted within three years from the date of such agreement. No transaction was concluded within three years of the agreement and therefore the assessee remained the owner of the land in question. Since the property was not transferred on 13-4-1981, another agreement was made on 10-4-1984 between the assessee and his wife Mrs. Usha Srinivasan in her capacity as trustee of Sree Ayyappa Family Trust whereby it was agreed to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fer of Property Act to come to a conclusion that where there is a contract of sale for consideration and such contract is in writing, the contract was executed by the transferor and the transferee has taken possession of the property by performing his part of the terms of contract. If all the aforesaid conditions are satisfied, the transferor is debarred from enforcing against the transferee any right in respect of the property by which the transferee has taken the possession even if the instrument of transfer is not registered. In the present case all the aforesaid conditions are satisfied and, therefore, it can be safely said that the assessee was having only a husk of title remained with him after 31-3-1984. According to him the principle laid down by the Rajasthan High Court in Sirehmal Nawalkha's case clearly supports the stand of the assessee. He came to the view that the relevant date for assessing the gift, if any, arises only in the assessment year 1990-91. According to him the registration of the deed is not relevant. If at all, there can be only a deemed gift and that can be only for the assessment year 1984-85 when the consideration passed on to the assessee. In the lig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h assessment year the gift transaction is liable to be taxed. Therefore, I do not go into the question whether at all there is a gift in the transaction because that issue is beyond the scope of my area for enquiry for giving answers to the questions referred to me. Therefore, I confine myself to the issue and decide in which assessment year the gift is liable to be taxed based on the facts and material available on record. The learned Judicial Member seems to have heavily relied upon the provisions of section 53 of the Transfer of Property Act, which has been extracted in para 17 of his order. It shows that where there is a part performance of the contract and only what remains to be done is registration of transfer, it is provided that the transferor or any person claiming under him shall be debarred from enforcing against the transferee and persons claiming under him any right in respect of the property of which the transferee has taken or continued in possession other than a right expressly provided by the terms of the contract. The concept of transfer under section 2(47) which includes transaction of the type referred to in section 53A of the Transfer of Property Act is differ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ucial date is the date on which the gift deed is executed and registered. A contrary view has been expressed in G.V. Krishna Rao v. Addl GTO [1968] 70 ITR 812 (AP) and Sirehmal Nawalkha's case. But sitting within the jurisdiction of the Madras High Court, I am of the view that the view expressed by the learned Accountant Member has to be followed which is squarely in accordance with the ratio laid down by the Madras High Court in K. Madhavakrishnan's case. Before parting with I may add that to bring any transaction under the purview of Gift-tax Act, the gift must be complete in all respects. it is no doubt true that gift-tax is not necessarily restricted to gift effected by written documents. If it is possible to effect a gift without an instrument in writing, gift-tax is payable on the same. But the subject-matter of a gift may be such that a written instrument is necessary to perfect as gift. Completed gifts alone attract liability to gift-tax. These were found expression in Sharadkumar Shrikrishna v. CGT [1986] 160 ITR 332 (MP). The principle laid down by the Madras High Court in K. Madhavakrishnan's case has been reaffirmed by the same High Court in Dr. Raja Sir M.A. Muthiah Ch ..... X X X X Extracts X X X X X X X X Extracts X X X X
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