An oral gift of land is not valid in law if the confirmation deed is not registered under the Indian Registration Act, 1908.

( 1 ) IN this reference, Begum Noor Banu Alladin is the assessee. She owned a building "rockland House" and vacant land of five acres at Sanatnagar. The assessee gifted away the two properties. The Rockland House was gifted on 17/09/1963, to her daughter-in-law, Sultana, and two grandsons-Aziz Noor Mohd. and Asif Noor Mohammad. Three days later, a memorandum was reduced to writing confirming the oral gift on 20/09/1963. As to the vacant land, the assessee made an oral gift on 1/04/1966, in favour of a charitable trust. Mohd. and Noor Mohammad are the trustees of the trust. The trustees were delivered the vacant land. The two confirmation deeds executed by the donor on 20/09/1963, and on 1/04/1966, were not registered under the Indian Registration Act, 1908. Begum Noor Banu Alladin died. Before the authorities under the Income-tax Act, 1961, the legal representatives of the donor asserted that the gifts were true and were made on 17/09/1963 and 1/04/1966. The donor ceased to be the owner of the two properties. The Income-tax Officer and the appellate authority did not accept that the gift were valid in law though true in fact. The Appellate Tribunal accepted the gifts to be true and held that the donor no more held the two properties, and, therefore, she or her legal representatives cannot in law be taxed for the income from the property derived by the donees.

( 2 ) THE assessee under her personal law was entitled to make an oral gift of the two properties. She did make oral gifts. The donees received the properties. In the case of Rockland House, the confirmation deed was executed three days later, on 20/09/1963. The document was not compulsorily registrable. Notwithstanding the fact of non- registration, the oral gift made on 17/09/1963, is true and valid in law. The position, however, as respects the vacant land is different. The gift was made on 1/04/1966, and contemporaneously the memorandum of confirmation was drawn. The memorandum, since it was not registered under the Indian Registration Act, become inadmissible in evidence. As a result or sequel of non-registration, the oral gift cannot be proved, for the deed is inadmissible. The position is so clear that it needs no further discussion.

( 3 ) THE issue that arises is whether the ground rent received by the trustees, Dost Mohammad and Noor mohammad,, can be taxed under the Act in the hands of the legal representatives of the assessee, for the donor died possessed of title to the vacant land. That the donnor ceased to hold the land and did not receive any income is not at all doubted. On the other hand that the trustees of the donee-trust received the income is also accepted. It is in this circumstance the question at issue is under what classification of section 14 of the Income-tax Act, 1961, the (income from the) property has to be computed as the income of the donee if at all such an income is to be taxed.

( 4 ) THE Appellate Tribunal, at the instance of the Revenue, referred the following question for the answer of this court :"whether, on the facts and in the circumstances, the income from the house property known as Rockland House and also the lease amount from the land measuring 5 acres situated at sanatnagar are assessable in the hands of the assessee ?"

( 5 ) THE question is capable of a simple answer so far as the Rockland House is concerned. The income from the house is to be taxed in the hands of the donees. The assessee-donor is not liable to pay the tax on above house. The question, however, is wrapped up in complexity as respects the lease amount for the acres of (vacant) land.

( 6 ) THE learned counsel for the Revenue asserts that the donor is still liable in law to pay taxes on the income derived from the vacant land. The donor is liable to account for the income under clause of section 14 of the Act, - "income from other sources". The Revenue in this case relied on the Supreme Court case pushpa Devi v. CIT [1977] 109 ITR 730, a case from t