COMMISSIONER OF GIFT TAX Vs. C D MUTHANNA

JUDGEMENT

(1.) This petition is by the revenue seeking an order of this Court directing the Income Tax Apbona fidepellate Tribunal, Bangalore Bench, Bangalore, to make a reference under Section 26(2) of the Gift Tax Act (hereinafter referred to as the 'Act').

(2.) Briefly stated, the facts leading to this petition are these: One Koravanda Muthanna gifted certain immovable properties to his four daughters and two grand-sons by a deed of gift dated 29-10-1977 which was duly registered on 7-11-1977. In the deed of gift, there were recitals had been put in possession of the immovable properties gifted on 29-3-1977 itself. The donor in his return under the Gift Tax Act for the assessment year 1978-79 included the value of the estate gifted together with the appurtenant properties valued at Rs. 5,26,276/-. That came to be accepted by the Gift Tax Officer. The Commissioner of Gift Tax in Karnataka in suo moto revision of the asbona fidesessment order in question came to the conbona fideclusion that, having regard to the nature of the gift, the Gift Tax Officer ought to have treated the gift as falling in the assessment year 1977-78 as possession was given of the gifted properties on 29-3-1977 and further that the assessing authority should take into account not only the value of the gifted estate and other immovable properties referred to in the Gift Deed but also the value of the standing crop for purposes of determining the value of the coffee estate. Accordingly, the Gift Tax Officer reassessed the assessee (since deceased by legal representatives) adding a sum of Rs. 2,93,045/- as the value of the standing crop in addition to the value disclosed by the assessee in his return. Aggrieved by the same, the assessee lodged an appeal before the Tribunal. The Tribunal after considering the arguments advanced by the Revenue as well as the appellant before it, came to the conclusion that, admittedly, the gift had taken effect on 29-3-1977 and as such the Gift Tax should be levied as if it was made in the assessment year 1977-78 and not 1978-79. It however further ruled that as there was no standing crop on 29-3-1977, the inclusion of the value of the standing crop at Rs. 4,80,000/- was impermissible. Therefore, the present petition seeking a reference.

(3.) We have heard Sri Chander Kumar, learned counsel for the Revenue. He has pointed out that the Tribunal has incorrectly applied the provisions, of Section 47 of the Registration Act of 1908 to come to the conclusion that the gift had taken effect on 29-3-1977. We do not want to express any opinion at this stage in regard to that contention. Certainly it suffices for us to state that as to when a gift of immovable property takes effect is a pure question of law depending on the date of execution of the gift deed and its registration in accordance with law in cases in which the value of the gifted immovable property exceeds Rs. 100/- in terms of the provisions in that behalf made in the Transfer of Property Act. Therefore, the Tribunal is bound to refer such a question when it was moved for a reference to this Court for decision. We therefore direct that the Tribunal do make a reference to this Court of the question which has been formulated as follows by the Revenue: