AZAD RAHIM Vs. GIFT TAX OFFICER

JUDGEMENT

(1.) G .T.A. No. 2 of 2002 arises out of the order in G.T.A. 3/Coch/2000 relating to the assessment year 1996 -97. Appellant therein is one Azad Rahim daughter of Mrs. Fathima Rahim. G.T.A. No. 3/02 and 4/02 arise out of G.T.A. 1/Coch/2000 and 2/Coch/2000 respectively. G.T.A. No 1/2000 was preferred by Mrs. Fathima Rahim, as thelegal heirof late Sri. A.A. Rahim and G.T.A. 2/Coch/2000was preferred by Mrs. Fathima Beevi. Common order was passed in G.T.A No. 1/Coch/2000 and 2/Coch/2000 and separate order has been passed for the year 1996 -97. Azad Rahim is the appellant in G.T.A No. 3/Coch/2000. Common questions arise for consideration in all these appeals and hence we are disposing of these appeals by a common judgment.

(2.) LATE Sri A.A. Rahim and his wife Smt. Fathinia Beevi jointly executed a settlement Deed No. 1606/95 on 20 -4 -1995 settling their immovable properties described in the schedules in favour of their sons, daughters and grandson. Assessing officer held that the properties settled in favour of the donees who are signatories to the Bhagapathram, are liable to gift tax. Since they had not filed any returns under the Gift Tax Act, 1958, the assessing officer issued notice under section 15(4) of the Act requiring the assessee to file the gift tax return for the assessment year 1996 -97. The assessee Mrs. Fathima Rahim being the legal heir of late Sri A.A. Rahim filed return under the Gift Tax Act 1958 on 27 -1 -1997 declaring taxable gift as Nil. Subsequent to the filing of the return, a letter dated 15 -3 -1999 was filed by the assessee stating that there is no gift involved in the transaction. Over and above it was stated that there is no gift of properties as per the Mohammedan Law. Further it was stated that there is a clause in the partition deed that during the life time of the assessee and his wife Fathima Rahim the allottees shall not assign the properties without their consent and if they do so, the alienation would be void. It was stated that the transaction did not satisfy the conditions laid down for Muslim gifts and there is no declaration of gift which is necessary to constitute Muslim gift. There should also be complete relinquishment by the donor of ownership. There is a clause prohibiting complete alienations without consent and treating such alienations as void. Since the ingredients of valid gift are absent, there is no element of gift involved in the transaction by the assessee.

(3.) COUNSEL appearing for the appellant submitted that the Tribunal has committed an error in holding that the gift was valid. According to the counsel, as per document styled as settlement deed no title has passed on to the alleged donces. Further it is also stated that the donors have not transferred the right in the building situated in the property belonged to the trust. It is also submitted that there is no transfer of possession of building or properties. Counsel also submitted that valuation was not properly conducted with notice to the assessee. Counsel for the revenue on the other hand contended that the provisions of the Transfer of Property Act are not applicable to Muslim gifts. Counsel appearing for the appellant placed reliance on the decisions in Chellappan Nadar v. Krishnan Nair (1963) KLT 750 and Pocker v. Kathiya (2000) (1) KLT 430. Counsel appearing for the revenue placed reliance on the decisions in W O. Holdsworth v. State of Uttar Pradesh : [1958]33ITR472(SC) , CWT v. Kripashankar Dayashanker Worh : [1971]81ITR763(SC) and Ismail v. Idrish : AIR1974Pat54 . The only question to be considered is whether settlement Deed No. 1606 of 1995 dated 20 -4 -1995 settling the immovable properties in favour of the children and grandson is gift under the provisions of the Gift Tax Act.