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2001 Supreme(SC) 1106
2001(6) Supreme 237
SUPREME COURT OF INDIA
(From Rajasthan High Court)
B.N. Kirpal & Shivaraj V. Patil, JJ.
Commissioner of Income Tax, Jaipur -Appellant
versus
Sirehmal Nawalakha -Respondent
Civil Appeal No. 6725 of 1994
Decided on 16-8-2001
Counsel for the Parties :
For the Appellant : Mr. B.B. Ahuja, Sr. Advocate, Mr. K.C. Kaushik, Mr. Rajiv Tyagi, Mr. R.R. Dwivedi, Mr. B.V. Balram Das for Ms. Sushma Suri, Advocates.
For the Respondent : Mr. N.M. Ranka, Sr. Advocate, Mr. Sushil Kumar Jain and Mr. Raj Kumar Yadav, Advocates.
IMPORTANT POINT
The Tribunal rightly rejected respondent s claim that a valid gift has been made of out-houses by an unregistered gift deed to his wife.
Headnote:Gift Tax Act, 1958-Sections 2(xii) and 4-Transfer of Property Act, 1882-Sections 122 and 123-Registration Act, 1908-Section 17-Gift of outhouses by assessee to his wife by an unregistered document-Whether can be taxed under Gift Tax Act as a deemed gift under Section 4? (No)-High Court reversed-Tribunal s order was correct that no valid gift of out-houses was made by the assessee to his wife in terms of Gift Tax Act, 1958 as it was not registered.
Held : There can be no doubt that certain transactions may not be regarded as a gift for the purposes of the Transfer of Property Act but would fall within the ambit of the expression gift by virtue of Section 4 of the Gift Tax Act, but in each one of the cases referred to in Section 4 there has to be a transfer of immovable property which in certain circumstances is to be regarded as a gift. For instance, cases falling under clause (a) of Section 4 where the property is transferred for less than adequate consideration such a transfer would not be regarded as a gift under the Transfer of Property Act but would be regarded as a gift under the Gift Tax Act. What is, however, important is that there has to be a transfer of property and a transfer by reason of Section 17 of the Registration Act can only be by way of a registered document. (Para 7)
What is important is that there has to be a valid transfer of property and whether that transfer amounts to a gift or not would bring in to question the applicability of the provisions of the Gift Tax Act. (Para 8)
The general law would take into its ambit not only the provisions of the Transfer of Property Act but would also require application of the provisions of the Registration Act. (Para 9)
In the instant case, the High Court did not even refer to the provisions of the Registration Act and, therefore, fell in error in coming to the conclusion that the case fell within the provisions of Section 4 of the Gift Tax Act and, therefore, as it was a deemed gift it was not necessary that the document had to be registered. In our view, the general law did not stand abrogated and the requirement of complying with the provisions of the Transfer of Property Act and the Registration Act had to be fulfilled. The High Court, therefore, erred in answering the question of law in the negative and against the Revenue. For the aforesaid reasons, this appeal is allowed, the judgment of the High Court is set aside and the question of law is answered in favour of the appellant. No costs. (Paras 10 and 11)
JUDGMENT
Kirpal, J.-The respondent was the owner of immovable property and by declaration dated 10th October, 1966 he sought to give a gift of certain out-houses attached to a building to his wife.
2. The declaration which was made was not registered. The Gift Tax Officer rejected the respondent s claim that a valid gift had been made as, according to him, there had not been any compliance with the provisions of Section 123 of the Transfer of Property Act. The Assistant Commissioner and the Tribunal took the same view and thereafter following question of law was referred to the High Court by the Tribunal :
"Whether on the facts and circumstances of the case, the Tribunal was justified in law in holding that no valid gift of out-houses of the building named as "Deep Shikha" was made by the assessee to his wife in terms of the Gift-tax Act, 1958?"
3. By the impugned judgment the High Court answered the question of law in favour of the respondent. It came to the conclusion that the definition of the word gift under the Gift Tax Act was wider than the definition of gift in the Transfer of Property Act and many acts and transactions which may not amount to gift under the Transfer for Property Act shall still amount to a gift under the Gift Tax Act especially by virtue of the provisions of Section 4 of the Gift Tax Act. It, accordingly, came to the conclusion that it was not necessary that a document should be registered in order that there should be a valid gift.
4. Section 122 of the Transfer of Property Act defines gift , inter alia, as meaning the transfer of immovable property made voluntarily and without consideration from one person to another. Section 123 provides that for purposes 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.
5. There can be little doubt that in order that there should be a transfer of property by way of gift as contemplated by the Transfer of Property Act, there has to be a registered document if the property sought to be transferred is immovable.
6. Section 2(xii) of the Gift Tax Act defines gift as meaning a transfer by one person to another of any existing movable or immovable property made voluntarily and without consideration and would include the transfer of a property deemed to be a gift under Section 4. The heading of Section 4 is "Gifts to include certain transfers". The said Section reads as follows :
"4. Gifts to include certain transfers. - (1) For the purpose 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:
Provided that nothing contained in this clause shall apply in any case where the property is transferred to the Government or where the value of the consideration for the transfer is determined or approved by the Central Government or the Reserve Bank of India;
(b) where property is transferred for a consideration which, having regard to the circumstances of the case, has not passed or is not intended to pass either in full or in part from the transferee to the transferor, the amount of the consideration which has not passed or is not intended to pass shall be deemed to be a gift made by the transferor;
(c) where there is a release, discharge, surrender, forfeiture or abandonment of any debt, contractor other actionable claim or of any interest in property by any person, the value of the release, discharge, surrender, forfeiture or abandonment, to the extent to which it has not been found to the satisfaction of the Assessing Officer to have been bona fide, shall be deemed to be a gift made by the person responsible for the release, dis
