A.S.Venkatachalamoorthy, J.: The assessee is an individual and owned a house-site, measuring 4012 sq.ft. in S.No.B-35, Thillai Nagar, Trichy. In 1981, he agreed to sell the said land for a consideration of Rs.55,000 to Iyyappa Family Trust (Trust created by the assessee’s father-in-law for the benefit of assessee’s two children). In fact, according to him, even in 1978, the property was delivered to the Trust. The Trust passed a Resolution on 31.3.1984, resolving to deliver the machinery and furniture belonging to it at book value to the assessee and the same is to be adjusted against the sale consideration of the said plot. The assessee’s claim is that the sale consideration was received on 31.3.1984 itself by way of book adjustment. On 10.4.1984, another agreement was entered into between the assessee and the Trust recording payment of full consideration and agreeing that the assessee would effect registration of the sale deed whenever required by the Trust and at any rate before 31.3.1989 to the beneficiaries jointly. The sale deed, as such, was executed on 22.11.1989 by the assessee in favour of the Trust, which mentioned the sale consideration as Rs.55,000 however, the stamp duty was paid on the market value of Rs.1,68,000. But, the Sub-Registrar adopted the guideline value at Rs.2,28,000 for stamp duty purposes.

The Gift Tax Officer, invoking the provisions of Sec.4(1)(a) of the Gift Tax Act, 1958, treated the amount of Rs.2,25,000 as deemed gift (the difference between the guideline value adopted by the Sub-Registrar at Rs.2,80,000 minus the consideration of Rs.50,000) and passed the assessment order dated 28.9.1992, gift tax at Rs.61,500.

The assessee filed an appeal before the Commissioner of Income Tax (Appeals), who accepted the assessee’s contention that the transfer of sale deed on 22.11.1989, and allowed the appeal by an order dated 16.7.1993.

The Revenue moved the Income Tax Appellate Authority by filing an appeal in G.T.A.No.38 of 1993. By an order dated 4.2.1999, the Accountant Member of the Tribunal took the view that mere agreement to sell the property on 13.4.1981 and delivery of the same would not constitute any gift and that the transfer of property took place only when the sale deed was registered, and held that the Assessing Officer was justified in assessing the value of the deemed gift under Sec.4(1)(a) of the Gift Tax Act.

However, the Judicial Member differed from the view taken by the Accountant Member, by holding that the transfer of property as defined under Sec.2(xxiv) of the Gift Tax Act was effected as early in 1984 when possession was taken and the consideration was paid and that if at all there was any gift, it can be taken only on the date of transfer on 31.3.1984 for the purpose of Sec.4(1)(a) of the Gift Tax Act. Therefore, it cannot be said that the relevant date for assessing the gift, if any, arises only in the assessment year 1990-91 and that the registration of the deed is not relevant.

The matter was referred to a third member, who, by his order dated 28.3.2001, concurred with the Accountant Member that the transfer took place only on the registration of the sale deed on 28.11.1989. The Tribunal passed final orders on 29.1.2002, allowing the appeal filed by the Department in view of the majority decision.

Being aggrieved by the order of the Tribunal, the assessee has now filed the above appeal.

2. The question for consideration is, as to whether the transfer of property was completed on 22.11.1989, when the document was executed and registered or earlier?

3. Sec.122 of the Transfer of Property Act defines the term ‘gift’ and Sec.123 lays down as to how a gift can be effected.

Sec.123 is to the effect that transfer must be effected by a registered instrument signed by or on behalf of the donor and attested by at least two witnesses.

4. The relevant provision in the Gift Tax Act is Sec.2(xii), which explains the term ‘gift’. The Section reads as under:

"In this Act, unless the context otherwise

Click Here to Read the rest of this document