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Smart Summary

Structured Summary of the Opinion: N. V. Balasubramaian, J.

Factual and Procedural Background

The petitioner challenged an order of the Commissioner, Coimbatore which rejected her revision petition under section 24 of the Gift Tax Act, 1958. The core facts as recorded in the opinion are:

  • On 12-2-1970 the petitioner executed a settlement of certain lands in favour of her daughter and, according to the petitioner, handed possession of the land to the donee thereafter.
  • However, the settlement deed was registered on 8-6-1970. For registration purposes the Registration Department's guideline value was Rs. 1,20,180; the Gift Tax Officer had assessed the value at Rs. 1,30,000.
  • The petitioner filed a return of gift claiming the relevant gift had been made in the financial year 1969-70 (assessment year 1970-71) because the deed was executed on 12-2-1970 and possession given then.
  • The Gift Tax Officer held the gift chargeable for assessment year 1971-72 on the basis that the deed was registered on 8-6-1970 (i.e., registration fell in financial year 1970-71, assessment year 1971-72) and assessed the market value accordingly.
  • The petitioner challenged the assessment by a revision petition before the Commissioner who: (a) agreed that ownership passes only on registration (thus upholding the date for tax purposes as registration date), (b) found the petitioner's claimed value lacking evidence, and (c) fixed the market value at Rs. 1,20,180 (guideline value), allowing the revision petition in part.
  • The petitioner filed this writ petition contesting the Commissioner's order on the grounds inter alia that (i) section 47 of the Registration Act makes the registered document operate from the date of execution (so the gift should be taxed for assessment year 1970-71), (ii) the Gift Tax Act is a complete code and should be applied without importing other statutes, (iii) the petitioner's valuer's report should have been accepted, and (iv) the petitioner is entitled to relief under section 18A of the Gift Tax Act.

Legal Issues Presented

  1. Whether, for the purpose of levy of gift-tax under the Gift Tax Act, a gift of immovable property is complete on the date of execution/ possession or only upon registration of the settlement deed (i.e., whether section 47 of the Registration Act makes the deed operate from the date of execution so as to fix the relevant assessment year).
  2. Whether provisions (such as section 123 of the Transfer of Property Act) governing transfer of immovable property can be disregarded when construing the Gift Tax Act, or whether registration requirements must be complied with for a valid gift of immovable property.
  3. Whether the market value fixed by the Commissioner (based on guideline value of the Registration Department) was correctly determined, or whether the petitioner’s valuer’s report should have been accepted.
  4. Whether the petitioner is entitled to credit for stamp duty under section 18A of the Gift Tax Act despite not specifically claiming that relief before the assessing officer.

Arguments of the Parties

Petitioner's Arguments

  • The Gift Tax Act is a self-contained code; the meaning of "gift" must be ascertained under that Act and not by importing provisions of other Acts (such as the Transfer of Property Act).
  • Under the Gift Tax Act the gift became complete when the settlement deed was executed on 12-2-1970 and possession was given to the donee; therefore the relevant assessment year should be 1970-71 (as the gift was made during financial year 1969-70).
  • Section 47 of the Registration Act makes a registered document operate from the date of execution and so the deed registered on 8-6-1970 should be treated as effective from 12-2-1970.
  • The value assessed by the Gift Tax Officer was without basis; the petitioner produced a valuer’s report fixing value at Rs. 83,330 and there were no grounds to discard it.
  • The petitioner was entitled to the statutory relief under section 18A of the Gift Tax Act.
  • Reference was made to a variety of precedents and the amended definition of "gift" (section 2(xii) including an Explanation introduced 1-4-1988) to support the contention that the Gift Tax Act should be interpreted broadly in favor of the petitioner.

Respondent's (Income Tax Department) Arguments

  • For a valid gift of immovable property, the requirements of section 123 of the Transfer of Property Act must be satisfied; mere handing over of the document or handing over possession is insufficient to effect transfer of immovable property.
  • The gift becomes complete only upon registration of the deed; although it may operate between the parties from an earlier date, as regards third parties (including tax authorities) the document is complete only on registration.
  • The valuer’s report is only an opinion and in absence of supporting material the Commissioner was justified in relying upon the Registration Department's guideline value.
  • The petitioner had not prayed for relief under section 18A before the assessing officer and therefore was not entitled to that relief (submission that no specific claim was made).
  • Relied upon earlier decisions (including K. Madhavakrishnan v. CGT) to support the need for compliance with section 123 of the Transfer of Property Act for gifts of immovable property.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Sirehmal Nawalkha v. CIT (1985) 156 ITR 714 (Raj) Held the Gift Tax Act is a self-contained code and the definition of "gift" is wide; considerations from the Transfer of Property Act should not be imported when construing Gift Tax Act. The court noted this decision supports the petitioner's position but expressly disagreed with its reasoning on the specific point of registration/ completion of transfer.
V.G. Krishna Rao v. Addl. GTO (1968) 70 ITR 812 (AP) Referenced by Sirehmal Nawalkha in discussing construction of the Gift Tax Act's definition of "gift". Mentioned in the summary of other courts' positions; not the basis for the final conclusion here.
K. Madhavakrishnan v. CGT (1980) 124 ITR 233 (Mad) Held that mere delivery of immovable property is insufficient; section 123 of the Transfer of Property Act requires a registered instrument for gifts of immovable property. The court relied on and followed this decision to hold that registration is required and mere delivery/possession is insufficient to constitute a gift under the Gift Tax Act.
Smt. Satyabati Goswami v. CGT (1978) 113 ITR 228 (Gau) Also held that the requirement of section 123 must be satisfied to make a gift of immovable property; gift effective only on registration. The court cited this decision as consistent with K. Madhavakrishnan and supportive of the conclusion that registration is necessary.
Arundhati Balkrishna v. CIT (1982) 138 ITR 245 (Guj) Held a gift becomes complete when the deed is executed and the instrument is handed over; registration does not affect the operative date because registration is an act of an officer and the document is effective from execution date. The court considered this authority but expressly disagreed with its conclusion on the point of when transfer becomes complete for third parties and for tax purposes.
Hamda Ammal v. Avadiappa Pathar 1991 (1) SCC 715 Supreme Court held that once registration takes place, it takes effect from the date of execution; applied in context of competing claims (attachment) between execution and registration. The court accepted that section 47 gives retrospective effect to the registered document but held that section 47 does not answer when the transfer becomes complete in law; registration is still necessary for completion vis-à-vis third parties and tax authorities.
Thakur Kishan Singh (Dead) v. Arvind Kumar 1994 (6) SCC 591 Quoted the principle that section 47 provides that a registered document operates from the time it would have commenced to operate if no registration had been required or made. The court relied on this to acknowledge retrospective operation but again distinguished "operation" from "completion" of the transfer for legal effect against third parties.
Ram Saran Lall v. Domini Kuer AIR 1961 SC 1747 Supreme Court consideration of scope of section 47; held that section 47 does not say when a sale would be deemed complete — completion occurs when registration is effected. The court relied on this precedent to support the proposition that completion of transfer occurs on registration, not merely because section 47 gives an effective date.
K.J. Nathan v. S.V. Maruthi Rao AIR 1965 SC 430 One of the Supreme Court decisions considered in the jurisprudential background to section 47 and completion of transactions. Mentioned as part of the authorities analysed; used in the court’s survey of conflicting views on when transfer is complete.
Hiralal Agrawal v. Rampadarath Singh AIR 1969 SC 244 Supreme Court authority on the effect of registration and the point at which a sale/transfer is complete. Used with other Supreme Court authority to establish that sale (and by analogy, transfer of immovable property) is complete on registration.
Kalyanasundaram Pillai v. Karuppa Moopanar AIR 1927 PC 42 Privy Council authority referred to by Gujarat High Court decisions on effectiveness of executed but subsequently registered documents. Referred to in the survey of decisions supporting the Gujarat High Court position; the present court did not accept the Gujarat High Court’s conclusion based on such authorities.
Venkat Subba Srinivas Hegde v. Subba Rama Hegde AIR 1928 PC 86 Privy Council decision considered in arguments about the operative date of registered documents. Referred to in the consideration of Gujarat High Court precedent; court analysed but did not adopt the deduction that execution alone completes the transfer for third parties.
Darbar Shivrajkumar v. CGT (1981) 131 ITR 647 (Guj) Held transaction of gift of immovable property is complete only on registration of the document; prior to registration the transaction is not complete. The court agreed with this view and cited it favourably as aligning with the conclusion that registration effects completion for purposes of third parties and tax authorities.
CGT v. Smt. Aloka Lata Sett (1991) 190 ITR 556 (Cal) Held that though a registered document may take effect between parties from an earlier date, for third parties the transfer becomes complete only on registration. The court cited and accepted this principle as supporting the distinction between effectiveness between parties and completion for third-party rights (including tax levy).
M. Ponnusamy & Ors. v. District Collector, Erode & Ors. 1999 (2) L. W 231 Authority noting that guideline/registrar values cannot be regarded as conclusive proof of market value. The court relied on this authority to support the proposition that guideline values are evidentiary but not conclusive and to critique the Commissioner’s reliance on guideline value without independent inquiry.
Ramesh Chand Bansal v. District Magistrate/Collector, Ghaziabad AIR 1999 SC 2126 Supreme Court held that circle rates fixed by the Collector are prima facie guidance and not final proof of market value; circle rates have limited application. The court cited this to reinforce that guideline/circle rates are not conclusive evidence of market value and to justify looking to the petitioner’s valuer’s report.
State of Punjab v. Mohabir Singh AIR 1996 SC 2994 Earlier Supreme Court authority on the non-finality of circle/rate determinations by officials for valuation purposes. Used in conjunction with Ramesh Chand Bansal to demonstrate the limited, prima facie value of guideline rates.

Court's Reasoning and Analysis

The court undertook a stepwise legal analysis focused on three principal questions: (1) when a gift of immovable property is complete for the purpose of the Gift Tax Act; (2) whether statutory registration requirements (notably section 123 of the Transfer of Property Act) must be met; and (3) whether the market value and stamp duty credit determinations by the administrative authorities were correct.

  1. On the completion of gift and interaction with other statutes:

    The court reviewed conflicting authorities. It acknowledged decisions (including the Gujarat High Court and certain Privy Council/Supreme Court cases) holding that a registered document operates from the date of execution (section 47 of the Registration Act) and that, in some contexts, that operative date defeats intervening claims. The court accepted that section 47 gives retrospective operative effect to a registered document — i.e., a registered instrument operates from the time it would have commenced to operate if no registration had been required or made.

    However, the court distinguished between (a) the retrospective operative effect conferred by section 47 and (b) the point at which a transfer is "complete in law" for external purposes (notably for third parties such as tax authorities). The court concluded that section 47 does not itself determine when a transfer is complete; instead, completion for immovable property depends on whether the statutory requirements (section 123 of the Transfer of Property Act) have been complied with.

  2. On the role of section 123 of the Transfer of Property Act:

    Relying on its earlier decision in K. Madhavakrishnan v. CGT and the Gauhati High Court in Smt. Satyabati Goswami, the court held that the requirements of section 123 (i.e., that transfer of immovable property by gift must be effected by a registered instrument attested as required) must be satisfied. Consequently, mere handing over of the document or possession is insufficient to constitute a gift of immovable property for the purposes of the Gift Tax Act.

    The court analysed the Explanation to section 2(xii) of the Gift Tax Act (introduced 1-4-1988) relied upon by the petitioner and observed: (a) the Explanation was not applicable to the facts (it was introduced later), and (b) even the Explanation does not dispense with the requirements of section 123 for gifts of immovable property — it only enlarges the class of persons who may be regarded as donors in certain situations.

  3. Reconciling section 47 (Registration Act) with completion of transfer:

    The court accepted that registered documents operate from an earlier date by virtue of section 47, and it cited Supreme Court authority for that proposition. But the court emphasised that several Supreme Court decisions (notably Ram Saran Lall and Hiralal Agrawal) support the position that a sale/transfer which is not complete until registration cannot be said to have been completed earlier merely because registration confers an operative date. The court thus concluded that while the deed, once registered, has retrospective effect as between the parties, the transfer of immovable property becomes complete in law (and for third parties such as tax authorities) only upon registration.

  4. On valuation:

    The court analysed the Commissioner’s reliance on the Registration Department's guideline value to fix market value at Rs. 1,20,180 and noted that guideline (or circle) rates are evidentiary but not conclusive proof of market value. It cited M. Ponnusamy and Supreme Court authorities (Ramesh Chand Bansal and State of Punjab v. Mohabir Singh) to support the proposition that such guideline values are prima facie indicators and not determinative.

    The court found that the Commissioner had not conducted independent inquiry and had overlooked the petitioner’s valuer’s report. Given the long delay in the proceedings and the aged assessment (1971-72) and earlier assessment activity (Gift Tax Officer's order dated 8-8-1979), the court exercised discretion to accept the petitioner’s valuer’s figure (Rs. 83,330) to avoid further remand and fresh proceedings.

  5. On entitlement to stamp duty credit under section 18A:

    The court held that section 18A of the Gift Tax Act provided a statutory relief (credit for stamp duty paid) and that the petitioner would be entitled to that relief even though she had not specifically claimed it before the assessing officer. The court directed the second respondent to pass orders in conformity with this judgment regarding that relief.

Holding and Implications

Holding: Subject to the modifications indicated in the opinion, the writ petition is disposed of.

The court's principal rulings and their immediate consequences were:

  • The court held that for a gift of immovable property to be complete in law (and for the purposes of third parties, including tax authorities), the requirements of section 123 of the Transfer of Property Act — notably registration — must be complied with. Therefore, mere execution of the deed and delivery of possession prior to registration is not sufficient to treat the gift as complete for levy of gift-tax.
  • The court explained that although section 47 of the Registration Act gives a registered document retrospective operative effect (i.e., it operates from the date it would have commenced to operate), section 47 does not itself determine when the transfer is complete for legal effect against third parties; completion occurs on registration for such purposes.
  • On valuation, the court found the Commissioner's determination (based solely on guideline value) to be inadequately supported by evidence; taking account of the lapse of time and absence of reason to discard petitioner’s report, the court directed that the market value of the property be taken as Rs. 83,330 (the petitioner’s valuer’s figure) to avoid further remand.
  • The court held that the petitioner is entitled to the credit for stamp duty paid under section 18A of the Gift Tax Act for the relevant assessment year, and directed the second respondent to pass orders in conformity with the judgment (i.e., grant that relief even though not specifically claimed earlier).
  • The writ petition was disposed of subject to the above modifications; there was to be no order as to costs.

Note: The court upheld the legal principle that registration is necessary for completion of transfer of immovable property vis-à-vis third parties and tax authorities, but it also accepted the petitioner’s valuation and statutory entitlement to section 18A relief, thereby modifying the assessment accordingly.

Show full summary ...

    Thulasimani Ammal v. Commissioner Of Income Tax & Anr.

    Order N. V. Balasubramaian, J.

    The writ petition is filed challenging the order of the Commissioner, Coimbatore rejecting the revision petition filed by the petitioner under section 24 of the Gift Tax Act, 1958.

    2. The facts leading to the filling of the writ petition are that the petitioner on 8-6-1970 had made a settlement of some of her lands in favour of her daughter and as per the guideline value maintained by the Registration department of the State of Tamil Nadu, the value of the land was taken to be Rs. 1,20,180 for the purpose of registration of the deed. The petitioner filed a return of gift for the assessment year 1970-71 on the ground that the settlement deed was executed on 12-2-1970 and the donee was also put in possession of the land thereafter and the donee was rightly in the possession of the land since the date of execution of the deed of settlement. The case of the petitioner was that since the gift was made during the financial year 1969-70, the relevant assessment for levy of tax would be 1970-71 and there was no obligation on her part to file the return of gift for the assessment year 1971-72. The Gift Tax Officer has not accepted the submission of the petitioner and held that the registration of the dead of settlement settling the immovable property took place on 8-6-1970, and the gift was properly chargeable under the Gift Tax Act for the assessment year 1971-72. In this view, he determined the value of the property gifted at Rs. 1,30,000 and made an assessment of the gift made for the assessment year 1971-72.

    3. The petitioner preferred a revision petition before the Commissioner challenging the order of assessment. The Commissioner was of the opinion that the ownership of the immovable property would pass after the deed of settlement is registered by the appropriate authority and the fact that the donee was put in possession on 12-2-1970 is not material and the ownership over the gifted property would pass only on 8-6-1970, when the settlement deed was registered, which fell during the financial year 1970-71 relating to the assessment year 1971-72. He, therefore, held that the Gift Tax Officer was justified in levying gift-tax for the assessment year 1971-72. The Commissioner was also of the opinion that the value fixed by the Gift Tax Officer was not correct. He also held that the value of the property as claimed by the petitioner at Rs. 83,330 cannot be accepted in the absence of any evidence and he determined the market value of the property at Rs. 1, 20, 180, on the basis of the guideline value of the Registration department and allowed the petition in part. It is against this order, the present writ petition is filed on the ground that by virtue of section 47 of the Registration Act, 1908, once registration of the document is effected, the title would relate back to the date of execution of the deed and the transaction would become complete when the document was registered. According to the petitioner, it is stated that the registered document would operate from the date of execution as it has retrospective effect to the date of execution of the deed. It is, therefore. stated that the order of the Commissioner holding that the ownership would only pass after the registration of the deed of conveyance is not sustainable in law. It is also stated that the Gift Tax Act is a complete code and it is not necessary to look into the provisions of other Acts, when the gift is complete under the Gift Tax Act. It is stated that as per the valuation report filed by the petitioner, the value of the land was fixed and there are no grounds to discard the valuation report and the order of the Commissioner holding that no evidence was produced by the petitioner as regards the valuation of the land was not correct. It is further stated that the petitioner is entitled to the relief under section 18A of the Gift Tax Act.

    4. Mr. P.P.S. Janarthana Raja, learned counsel for the petitioner submitted that when a gift of an immovable property takes effect, what has to be seen is whether there was a gift under the provisions of the Gift Tax Act, and it is not open to the Gift Tax Officer or the revisional authority to take note of other Acts to determine the question when the gift would become complete. According to the learned counsel for the petitioner, under the provisions of the Gift Tax Act, the gift would become complete when it was executed and the property was handed over to the donee. In this connection, learned counsel referred to the amendment made to the definition "gift" under section 2(xii) of the Gift Tax Act and submitted that though the Explanation was introduced by the Finance (No. 2) Act, 1987, with effect from 1-4-1988, it gives a clue that under the Gift Tax Act, the word, "gift" is widely defined and it is not open to the respondents to look into other Acts to find out when the gift becomes complete. Learned counsel for the petitioner relied upon the decision of Rajasthan High Court in the case of Sirehmal Nawalkha v. CIT (1985) 156 ITR 714 (Raj). The second submission of the learned counsel for the petitioner was that under section 47 of the Registration Act, if a document is registered, it would relate back to the date of execution of the document and, therefore, the deed of settlement, though registered on 8-6-1970, would take effect from 12-2-1970, and the gift would be chargeable to tax under the Gift Tax Act for the assessment year 1970-71. In this connection, learned counsel relied upon the decision of the Gujarat High Court in Arundhati Balkrishna v. CIT (1982) 138 ITR 245 (Guj), the decisions of the Supreme Court in Hamda Ammal v. Avadiappa Pathar 1991 (1) SCC 715 and Thakur Kishan Singh (Dead) v. Arvind Kumar. 1994 (6) SCC 591. Learned counsel also submitted that the value determined by the Gift Tax Officer was arrived at without any material and the Commissioner in the revision also was not correct in placing reliance on the guideline value of the Registration department. Learned counsel submitted that the CIT was not correct in stating that no evidence was produced in support of the valuation of the land as the petitioner has filed the report of the valuer and in the absence of any contra evidence the report of the valuer should have been accepted. Finally, learned counsel submitted that the relief under section 18A of the Gift Tax Act should have been granted to the petitioner.

    5. Mr. C.V. Rajan, learned standing counsel for the Income Tax department, on the other hand, submitted that for a valid gift of an immovable property to be made, it is essential that all requirements under section 123 of the Transfer of Property Act should be satisfied and the mere handing over of the document or handing over the possession of the immovable property would not be sufficient for the transfer of the property in favour of the donee. Learned counsel in this connection relied upon the decision of this Court in K. Madhavakrishnan v. CGT (1980) 124 ITR 233 (Mad). He also submitted that the gift would become complete only when the deed was registered and insofar as third parties are concerned, the document would become complete only from the date of the registration and according to him, the gift has become complete only on the date of the registration, though it may have effect between the parties to the document from the date of execution of the deed. Learned counsel submitted that the report of the valuer would only constitute his opinion and in the absence of any material, the Commissioner was quite justified in relying upon the guideline value. Learned counsel also submitted that the petitioner had not prayed any relief under section 18A of the Gift Tax Act, and hence the petitioner is not entitled to that relief.

    6. I have carefully considered the submissions of the learned counsel for the parties. Insofar as the first submission made by the learned counsel for the petitioner is concerned, the decision of the Rajasthan High Court in Sirehmal Nawalkha v. CIT (supra) no doubt, supports the case of the petitioner. The Rajasthan High Court has held that the Gift Tax Act is a self-contained enactment and in view of the wide definition of the term. "gift", many acts and transactions which may not amount to gift under the Transfer of Property Act, would be regarded as a gift under the Gift Tax Act. The Rajasthan High Court noticed the decision of the Andhra Pradesh High Court in V.G. Krishna Rao v. Addl. GTO (1968) 70 ITR 812 (AP) and held that considerations arising from the definition of gift in the Transfer of Property Act cannot be imported while construing the provisions of the Gift Tax Act and the Rajasthan High Court held as under :

    "The Gift Tax Act is a self-contained code in itself Thus, it is obvious that the legislature did not adopt the definition of gift from the Transfer of Property Act as has been done in other cases mentioned above. From the above, it is clear that gift under section 2(xii) includes certain transfers detailed in section 4(1) and (2) of the Gift Tax Act also. Many acts and transactions which shall not amount to gifts under the Transfer of Property Act shall amount to gift under the Gift Tax Act. The concept of gift under the Gift Tax Act is much wider. The Gift Tax Act includes many transactions and acts in its net though ordinarily they may not be necessarily covered within the definition of gift given in the Transfer of Property Act. "Gift" has been defined under the Transfer of Property Act ........ ".

    However, I am unable to agree with the reasonings of the Rajasthan High Court, as this court in K. Madhavakrishnan v. CGT (supra) has held that the mere delivery of immovable property would not satisfy the requirements of section 123 of the Transfer of Property Act, and there would be no gift under the Gift Tax Act -by the mere delivery of immovable property. This court has held as under :

    " section 123 of the Transfer of Property Act provides that for the purpose 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 withnesses. The Gift Tax Act does not enact any exception to the general law as found in section 123 of the Transfer of Property Act. Therefore, in order to effectuate a valid gift, the requirements of section 123 of the Transfer of Property Act should have been complied with section 123 of the Transfer of Property Act requires a registered instrument."

    8. The Gauhati High Court in the case of Smt. Satyabati Goswami v. CGT (1978) 113 ITR 228 (Gau) has also taken the same view that tile requirement of section 123 of the Transfer of Property Act should be satisfied to make a gift of immovable property and the court held as under :

    "To make a gift of immovable property, the property must be transferred and that transfer must be effected by registered instrument as provided under section 123 of the Transfer of Property Act. Admittedly, there was no registered deed of gift with respect to the land purported to be gifted in 1952. But registered deeds of gift were executed on 11-6-1959. So the transfer by gifts in the instant case became effective in law only on 11-6-1959. No transfer by gift can be said to have taken place in respect of the lands in question prior to 1st day of April, 1957, in the absence of the registered deed of gift."

    In view of the decision of this court, I hold that the mere delivery of immovable property to the donee without fulfilling the requirements of section 123 of the Transfer of Property Act is not sufficient to regard the transaction as a gift within the meaning of the Gift Tax Act.

    9. Under section 2(xii) of the Gift Tax Act, for a valid gift to be made there must be a transfer by one person to another of any existing movable or immovable property and, therefore, unless there is a valid transfer of the property in the eye of law, there is no gift for levy of gift-tax under the Gift Tax Act. The definition of the expression, "transfer of property" enlarging the meaning of transfer for the purpose of the Gift Tax Act also does not in anyway dispense with the requirement of registration of the deed of settlement settling an immovable property favouring a donee. It is well established that section 2(xxiv) of the Gift Tax Act also contemplates a bilateral transfer and unless the document transferring immovable property is validly registered, there is no gift under the Gift Tax Act.

    10. Learned counsel for the petitioner also referred to the ExpIn. to section 2(xii) of the Gift Tax Act and submitted that transfers made by a person in possession of the property in part-performance of the contract or by a person who is regarded as the owner under section 27(iiia) or 27(iiib) of the Income Tax Act are also regarded as a gift, and, therefore, he submitted that the handing over of document would be sufficient to constitute a gift. I am unable to accept the submission of the learned counsel for the petitioner. Firstly, the Expln. to section 2(xii) was introduced with effect from 1-4-1988, and it has no application to the facts of the case. Secondly, the Explanation, in my view, does not in any way militate against the fulfilment of the requirements of section 123 of the Transfer of Property Act for a valid gift to be made by those persons mentioned in section 27(iiia) or 27(iiib) of the Income Tax Act. The persons mentioned in section 27(iii), 27(iiia) or 27(iiib) of the Income Tax Act are not normally regarded as owners, but any transfer made by them is also regarded as a gift within the meaning of the Gift Tax Act, but the ExpIn. to section 2(xii) of the Gift Tax Act merely expands the categories of persons to be regarded as donors, but it does not dispense with the requirements of fulfilment of conditions of section 123 of the Transfer of Property Act and the requirement of registration for a valid gift of immovable property to take effect. Moreover, if the contention of the petitioner is accepted, it will be open to an assessee to evade the tax as it will be within his powers to declare that the possession of the immovable property was handed over during a period which the officer may not be able to reach at all. Hence, the first submission of the learned counsel for the petitioner that the mere handing over of the document and the handing over of the possession of the immovable property would constitute a valid gift of an immovable property is not well-founded and is rejected.

    11. Insofar as the second submission of the learned counsel for the petitioner is concerned, learned counsel relied upon the decision of the Gujarat High Court in the case of Arundhati Balkrishna v. CIT (supra) wherein the Gujarat High Court after considering the decisions of the Supreme Court in Ram Saran Lall v. Domini Kuer AIR 1961 SC 1747, K.J. Nathan v. S.V. Maruthi Rao AIR 1965 SC 430 and Hiralal Agrawal v. Rampadarath Singh AIR 1969 SC 244 and also the decisions of the Privy Council in Kalyanasundaram Pillai v. Karuppa Moopanar AIR 1927 PC 42 and Venkat Subba Srinivas Hegde v. Subba Rama Hegde AIR 1928 PC 86 held that a gift would become complete when the deed was executed and the instrument of gift was handed over by the donor to the donee and the gift would become effective from the date of execution since registration of the document does not depend upon the consent of the donor, but it is the act of an officer appointed by law for that purpose and the transaction of the gift would become complete on the date on which the document was executed and not on the date on which it was subsequently registered. The Gujarat High Court in the above case has held as under :

    "............... the transaction of gift is complete if the other formalities are completed and the document of gift is executed and that the donor cannot resile from his action before the document is registered. The ratio of both the decisions of the Privy Council is to the effect that a transaction of gift by a document which is subsequently registered becomes operative from the date on which the document of gift was executed.

    12. Learned counsel referred to the decision of the Supreme Court in the case of Hamda Ammal v. Avadiappa Pathar (supra) wherein the appellant before the Supreme Court purchased a property from the respondents/vendors by a sale deed executed in her favour in September, 1970, and the sale deed was registered on 26-10-1970, but before the registration of the sale deed, the respondent Avadiappa Pathar filed a suit for recovery of money against the vendors of Hamda Ammal and obtained an order of attachment before judgment on 17-9-1970, and the suit was also decreed in favour of Avadiappa Pathar, and the question that arose before the Supreme Court was whether the appellant Hamda Ammal was entitled to the property sold in her favour by virtue of the sale deed dt. 9-9-1970, and registered subsequently or the respondent Avadiappa Pathar had a better claim over the property on the basis of the order of attachment obtained by him in between the date of execution and the date of registration of the sale deed. The Supreme Court held that once the registration takes place, it takes effect from the date of execution and since the sale deed was executed prior to the attachment before judgment, the sale deed would prevail over the attachment before judgment. The Supreme Court distinguished the two earlier cases of the Apex Court in Ram Saran Lall v. Mst. Domini Kuer (supra) and Hiralal Agrawal v. Rampadarath Singh (supra).

    13. Learned counsel also relied upon the decision of the Supreme Court in the case of Thakur Kishan Singh (Dead) v. Arvind Kumar. (supra) wherein the Supreme Court held as under :

    "section 47 of the Registration Act provides that a registered document shall operate from the time it would have commenced to operate if no registration thereof had been required or made and not from the time of its registration."

    14. I am of the view that the above decisions are authorities for the proposition that under section 47 of the Registration Act, the document registered would take effect from the date of execution of the document, but the question remains when the transfer would become complete in the eye of law. The scope of section 47 of the Registration Act as considered by the Supreme Court in Ram Saran v. Domini Kuer (supra) and the Supreme Court has held that the completion of the sale takes place when the property is registered and section 47 of the Registration Act does not say when a sale would be deemed to be complete. The ratio of the Supreme Court on the scope of section 47 of the Registration Act reads as under:

    "A sale which is admittedly not completed until the registration of the instrument of sale is completed cannot be said to have been completed earlier because by virtue of section 47 the instrument by which it is effected, after it has been registered, commences to operate from an earlier date."

    15. The scope of section 47 of the Registration Act was again the subject-matter of consideration before the Supreme Court in Hiralal Agrawal v. Rampadarath Singh (supra) and the Supreme Court reiterated the position that sale would become complete only when the registration of the sale deed takes place and not before.

    16. The Gujarat High Court in the case of Darbar Shivrajkumar v. CGT (1981) 131 ITR 647 (Guj) following the above two decisions of the Supreme Court held that transaction of a gift of immovable property would be complete only on registration of the document and prior to the registration of the document, the transaction is not complete and there is no gift in the eye of law. The court held as under :

    "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.

    17. The Calcutta High Court in the case of CGT v. Smt. Aloka Lata Sett (1991) 190 ITR 556 (Cal) has also taken the same view and held that though the registered document may take effect from a date anterior to the date of registration as between the transferor and transferee of immovable property, but in the case of third parties the point of time at which the transfer would become complete is when it is registered.

    18. I am of the view that though the transaction of the gift may be regarded as valid in between the donor and the donee from the date of execution of the settlement deed, but if the document is required to be registered, the transfer of immovable property would become complete by registration of the document. Though by virtue of section 47 of the Registration Act, it would relate back to the date of execution, in such cases, I hold that only by registration of the document transferring the immovable property, the transfer would become complete though it may have effect from a date anterior to the date of registration and insofar as third parties, particularly, the tax authorities are concerned, the relevant date for the levy of tax is the date of registration of the document.

    19. Learned authors Chaturvedi & Pithisaria in Income Tax Law (1993-94 Edn. Vol. 9) at p. 1557 also noticed the conflict of views expressed by various High Courts. I hold that a gift of immovable property would become complete only when the document is registered and section 47 of the Registration Act does not deal with the concept of the completion of the transaction and it provides for an effective date for a document. Though the document may become effective as between the parties to the document from the date of execution and unless the transaction is complete in the eye of law, there is no gift within the meaning of law. The definition of the expression, 'gift' in section 2(xii) of the Gift Tax Act does not in any way help the petitioner as there was no transfer as contemplated under the law before the registration of the said document. Therefore, I am unable to agree with the view of the Gujarat High Court expressed in Arundhati Balkrishna v. CIT (supra) but I agree with the earlier decision of the Gujarat High Court in Darbar Shivrajkumar v. CGT (supra) and the decision of the Calcutta High Court. in CGT v. Smt. Aloka Lata Sett (supra).

    20. The next question that arises is that the determination of market value by the Commissioner is correct. I find some force in the submission of the learned counsel for the petitioner. The Commissioner has found that the value of the property was determined at Rs. 1,30,000 by the Gift Tax Officer without any basis. The Commissioner however determined the value of the property gifted at Rs. 1,20,180 on the basis of the guideline value of the Registration department. It is well settled that guideline value regarding valuation of the property has evidentiary value and they are only intended to give information or instruction to the registering authorities but the guidelines, as such would not establish the market value of the land. In the decision of this court in M. Ponnusamy & Ors. v. District Collector, Erode & Ors. 1999 (2) L. W 231, E. Padmanabhan, J. after referring to earlier cases on the topic has held that the guideline value cannot be regarded as a conclusive evidence regarding market value of a land.

    21. The Supreme Court in Ramesh Chand Bansal v. District Magistrate/ Collector, Ghaziabad AIR 1999 SC 2126, following the earlier decision in State of Punjab v. Mohabir Singh AIR 1996 SC 2994 has held that the circle rate fixed by the Collector is not final but it is only a prima facie determination of the rate of the area concerned to give guidance to the registering authority to test prima facie whether the instrument has properly described the value of the property and the circle rate under the U.P. Stamp Rules is not final. The Supreme Court has also held that the circle rate has a limited application and it does not take away any right of the such person to show that the property in question was correctly valued as he gets an opportunity in case of undervaluation to prove it before the Collector after reference is made.

    22. Here, the Commissioner has not conducted any independent investigation on the question of determination of the market value of the property gifted by collecting necessary materials for the determination of the same, de hors the guideline value. Since the determination of the market value of the property by the Commissioner is not based on relevant materials and the Commissioner has overlooked the material produced by the petitioner, the matter may have to be remitted to the Commissioner for fresh determination of the market value of the property. However, considering the fact that the assessment is of the year 1971-72 and the order of the Gift Tax Officer was made as early as 8-8-1979, I am of the view that instead of remitting the matter to the Commissioner the market value shown by the petitioner, which is based on the valuer's report, viz., a sum of Rs. 83,330 can be taken as the market value of the property so that further proceedings on the determination of the market value can be avoided. Further, the value shown by the petitioner is based on the report of the approved valuer and there are no justifiable reasons to discard the same. Accordingly, I direct that the market value of the property settled should be taken as Rs. 83,330 as its value.

    23. Insofar as the credit for the stamp duty paid is concerned, though the petitioner has not made any claim for stamp duty before the assessing officer, the petitioner would be entitled to the said relief under section 18A of the Gift Tax Act as then existing during the relevant assessment year in question. Though the petitioner has not claimed the same before the Gift Tax Officer the relief under section 18A of the Gift Tax Act is a statutory relief under the provisions of the statute and, therefore, irrespective of the question whether a specific claim was made by the petitioner or not for the credit for the stamp duty paid on the instrument of gift, the petitioner would be entitled to the relief available under section 18A of the Gift Tax Act. The second respondent is directed to pass orders in conformity with the judgment.

    24. Subject to the modifications indicated earlier, the writ petition is disposed of. However, in the circumstances, there will be no order as to costs.

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    Thulasimani Ammal v. Commissioner Of Income Tax & Anr.
    (Sep 30, 1999)