DARBAR SHIVRAJKUMAR Vs. COMMISSIONER OF GIFT TAX

JUDGEMENT

(1.) Does a gift of immovable property become complete as soon as the gift deed is executed or only upon its being registered? When does the transaction become complete so as to be eligible to gift tax under the provisions of the Gift -tax Act, 1958 (hereinafter referred to as the Act)? This question arises by reason of the fact that the charging section under the Act provides inter alia, that there shall be charged for every assessment year commencing on and from the 1st day of April, a fax in respect of the gift if any, made by a person during the previous year at the specified rate. In order to determine as to on which date in a particular year, the assessee would be liable to pay the tax on the gift made by him, a question arises as to when the transaction of gift is complete within the moaning of Section 3 of the Act so as to attract liability to gift tax in a particular year. The Gift -tax Officer took the view that the transaction of gift becomes complete on its registration and the liability to pay the tax on the gift must be determined from the stand point of the date on which gift -deed was registered under the relevant provisions of the Registration Act, 1908. The Appellate Asstt. Commissioner of Gift tax reversed the decision of the Gift -tax Officer and took the view that the date on which the gift deed was executed was the relevant date and not the date on which the document was registered. The Income -tax Appellate Tribunal, Ahmedabad Bench 'C' (hereinafter referred to as the Tribunal) allowed the appeal preferred by the Department, up -turned the decision of the Appellate Asstt. Commissioner of Gift -tax, and restored the decision of the Gift -tax Officer. Thereupon the present Reference has bean made to this. Court at the instance of the assessee.

(2.) Section 122 of the Transfer of Property Act, 1882, inter alia provides that a gift can be made by transfer of an immovable property voluntarily and without consideration by donor to the donee. The expression 'transfer' has to be interpreted in the light of section 123 of the said Act which provides that for the purpose of making a gift of immovable property, the transfer must be effected by a registered instrument executed in a particular manner. On a! combined reading of Section 122 and section 123 of the Act it is evident that a transaction of gift can be brought about by executing a registered document subject to other conditions being fulfilled. In the present case, the document has been executed in one assessment year but it has been registered in the subsequent assessment year. Since on a combined reading of sections 122 and 123 it is evident that the transaction of gift would be complete provided and only provided a registered document is executed and other conditions are fulfilled, it cannot be said that the transaction was complete and a gift in the eye of law came to be made by the donor to the donee, prior to the registration of the document by which the gift was made. Reliance, however, was placed on section 47 of the Registration Act, 1908 which provides that a registered document shall operate from the time from which it would have commenced to operate if no registration thereof had been required or made and not from the time of its registration. The true scope of section 47 has to be realized in order to comprehend its impact. A question pertaining to the scope of this provision arose before the Supreme Court in Ram Saran Lal and ors vs. Mst. Domini Kuer and ors., AIR 1961 S C. 1747, the Supreme Court observed that section 47 of the Registration Act does not say when a sale would be deemed to be complete. It only permits a document, when registered, to operate from a certain date which may be earlier than the date when it was registered. The pertinent observations as regards the scope and object of the section made therein are: -