The Judgment of the Court was delivered by
Ajit K. Sengupta, J.:— In this reference under section 26(1) of the Gift-tax Act, 1958, the following question of law has been referred to this court for the assessment year 1974-75:
“Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the value of the immovable properties gifted by the assessee by a deed executed on April 13, 1973, but registered on July 13, 1973, should be deleted from the total taxable gift of the asses-see for the assessment year 1974-75?”
2. The facts, shortly stated, are as follows:
The assessee filed a gift-tax return on August 20, 1974, declaring the value of the total gifts at Rs. 1,69,996. The Gift-tax Officer found that the gifts made by the assessee under a deed, registered on July 13, 1973, had not been included in the gifts returned by the assessee. He, therefore, included the amount of that gift being Rs. 1,36,242 while determining the value of the gift for the year under consideration.
3. The assessee appealed to the Commissioner of Gift-tax (Appeals) and contended that the gift deed, though registered on July 13, 1973, was executed on April 13, 1973. It was also pointed out that the assessee was maintaining the previous year as per Bengali calendar year and the gift of Rs. 1,36,242, having been made within the previous year relevant to the assessment year 1973-74, should not have been included in determining the gift for the assessment year 1974-75. The Commissioner of Gift-tax (Appeals) rejected the assessee's submission and upheld the action of the Gift-tax Officer.
4. Against the said order of the Commissioner of Gift-tax (Appeals), the assessee preferred a second appeal before the Tribunal and learned counsel for the assessee reiterated the same contentions as were advanced before the Commissioner of Gift-tax (Appeals). The Tribunal held that the date of execution was the crucial date which should be taken into consideration as the date of transfer of the property. Accordingly, the Tribunal held that the date of execution of the gift being April 13, 1973, which fell within the previous year relevant to the assessment year 1973-74 according to the Bengali calendar, such gift could not be included in the assessment for the assessment year 1974-75.
5. The short question which calls for determination is whether the gift becomes effective from the date of registration of the document or from the date of execution of such deed.
6. The material facts are not in dispute. Although the deed of gift was registered on July 13, 1973, it was executed on April 13, 1973. The assess-ability of gift-tax for this assessment year will depend on whether the crucial date is the date of registration of the deed or the date of execution of the deed. Under section 122 of the Transfer of Property Act, a gift is the transfer of certain existing movable or immovable property made voluntarily and without consideration by the donor to the donee. 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 witnesses. The Gift-tax Act does not enact any exception to the general law as contained 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 must be complied with. Section 123 of the Transfer of Property Act requires a registered instrument for a valid gift. When a person gives delivery of possession in consequence of a gift of any immovable property, the title to the said property does not pass on to the donee.
7. Section 17(1)(a) of the Registration Act provides that an instrument of gift of immovable property requires registration under the said Act whatever be the value of the property.
8. Sections 122 and 123 of the Transfer of Property Act leave no room for doubt that a transaction of transfer of immovable property will be complete only 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 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. If the donor dies before registration, the document may be presented for registration after his death. Such registration will have the same effect as registration during his lifetime. But reliance was placed on section 47 of the Registration Act 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. Under section 47, a registered document operates from the date of its execution and not from the date of its registration. The result is that if two registered documents are executed by the same person in respect of the same property to two different persons at different times, the one which was executed first has priority over the other, although the former was registered subsequent to the latter. In other words, registration of a document relates to the date of its execution. This is so between the parties to the document. But, as regards third parties, it is effective from the date of registration.
9. Where an instrument which purports to transfer title to property requires to be registered, the title does not pass until registration has been effected. No new title is created by registration. It only affirms a title which has been created by the deed. The title is complete and the effect of registration is to make it unquestionable and absolute. But, by virtue of this section, once registration is effected, the title relates to its date of execution. The contention of the assessee is that since the title relates back to the date of execution, the gift must be deemed to have been effective from that date.
10. A gift of immovable property can only be made by a registered instrument. A deed cannot be dispensed with even for property of small value. A gift of immovable property cannot be valid without a registered instrument. In T.V Kalyanasundaram Pillai v. Karuppa Mooppanar, AIR 1927 PC 42, the Privy Council sought to reconcile the provision of Section 123 of the Transfer of Property Act with section 47 of the Registration Act by saying that, while registration is a necessary solemnity in order to the enforcement of a gift of immovable property, it does not suspend the gift until registration actually takes place. When the instrument of gift has been handed-over by the donor to the donee and accepted by him, the former has done everything in his power to complete the donation and to make it effective. Registration does not depend upon his consent but is the act of an officer appointed by law for the purpose. The Privy Council took the view that the transaction of gift was complete on the date on which the document was executed and not on the date on which it was subsequently registered.
11. A similar question arose in Venkat Subba Srinivas Hegde v. Subba Rama Hegde, AIR 1928 PC 86. The point at issue was expressed by the High Court in the judgment which gave rise to the appeal before the Privy Council as under (p. 87):
“Can a donor of immovable property, when the gift can only be effected by a registered document, resile from his action before the document had been registered and if the donee refused to give back the document, can the donor obtain an injunction from the court restraining the donee from proceeding to register the document?”
12. The Privy Council referred to its earlier decision in Kalyanasundaram's case, AIR 1927 PC 42, and reiterated the effect of registration in the following passage (p. 87):
“Registration does not depend upon his (the donor's) consent, but is the act of an officer appointed by law for the purpose, who, if the deed is executed by or on behalf of the donor and is attested by at least two witnesses, must register it if it is presented by a person having the necessary interest within the prescribed period. Neither death, nor the express revocation by the donor, is a ground for refusing registration, if the other conditions are complied with.”
13. This case does not directly deal with the effect of section 47. The ratio of the decision is that 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 made by a document which is subsequently registered becomes operative from the date on which the document of gift was executed.
14. The true scope of section 47 has to be realised in order to comprehend its impact. A question pertaining to the scope of this provision arose before the Supreme Court in Ram Saran Lall v. Mst. Domini Kuer, AIR 1961 SC 1747. The facts of that case are that, on January 31, 1946, a deed of sale was executed in favour of the purchaser. The deed was presented for registration thereafter and, on February 9, 1946, the registration became complete in terms of section 61 of the Registration Act. The registered document was received from the registration office on February 13, 1946. The High Court held that the sale in this case became complete on the completion of the registration of the instrument of sale which was done on February 9, 1946, when the instrument was copied out in the books of the Registrar's office. Before the Supreme Court, the learned Attorney-General contended that the High Court overlooked section 47 of the Registration Act the effect of which was to make a registered document operate from the time from which it would have commenced to operate if no registration thereof had been required and not from the time of its registration. It was his contention that once the document is registered, as the deed of sale in that case was, it begins to operate from the time it would have otherwise operated and therefore the position in that case was that the sale became operative and hence complete on January 31, 1946, The Supreme Court noted the further contention as follows (p. 1749):
“As authority in support of his contention that in view of section 47 of the Registration Act, the sale in the present case must be deemed to have been completed on the day the instrument was executed, the learned Attorney-General relied on Bindeshri v. Somnath Bhadry, AIR 1916 All 199 and Gopal Ram v. Lachmi Misir, AIR 1926 All 549.”
15. The Supreme Court held as follows (p. 1749): “We do not think that the learned Attorney-General's contention is well-founded. We will assume that the learned Attorney-General's construction of the instrument of sale that the property was intended to pass under it on the date of the instrument is correct. section 47 of the Registration Act does not, however, 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 object of this section is to decide which of two or more registered instruments in respect of the same property is to have effect. The section applies to a document only after it has been registered. It has nothing to do with the completion of the registration and therefore nothing to do with the completion of a sale when the instrument is one of sale. 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. Therefore, we do not think that the sale in this case can be said, in view of section 47, to have been completed on January 31, 1946. The view that we have taken of section 47 of the Registration Act seems to have been taken in Tilakdhari Singh…Defendant 5 v. Gour Narain…Plaintiff ., AIR 1921 Pat 150. We believe that the same view was expressed in Nareshchandra Dutta v. Girishchandra Das, ILR [1935] 62 Cal 979 : AIR 1936 Cal 17 and Gobardhan Bar v. Guna Dhar Bar*, ILR [1940] 2 Cal 270 : AIR 1941 Cal 78.”
(underlined* by us.).
16. The Supreme Court also observed (p. 1749):
“With regard to the two cases on which the Attorney-General has relied, it has to be observed that they were not concerned with a right of pre-emption arising on a sale of property. Bindeshri Prasad's case, AIR 1916 All 199, was concerned with a suit for zar-i-chaharum. It does not appear from the report what that right was or when it arose. It is not possible, therefore, to derive much assistance from it. Gopal Ram's case, AIR 1926 All 549, was concerned with a right of pre-emption arising on the grant of a lease and the question was whether the suit for the enforcement of such a right was barred by limitation. It appears that article 120 was applied to that suit and it was held that the cause of action for the exercise of the right of pre-emption arose as soon as the lease was executed and even before it was registered though before the actual registration the suit for pre-emption could not have been maintained. This view was taken in reliance under section 47 of the Registration Act. We are not aware whether the law of pre-emption applicable to the case required that there should be a completed lease before the right to re-empt could be enforced. If that law did so require, then we do not think that the case was rightly decided. It was said in that case that ‘when the law has given to a transaction a retrospective effect, it must have that effect’. We do not think that a transaction which when completed has a retrospective operation can be said for that reason to have been completed on the date from which it has that operation.”
17. The scope of section 47 of the Registration Act again came up for consideration before the Supreme Court in Hiralal Agrawal v. Rampadarath Singh, AIR 1969 SC 244. The point that was canvassed before the Supreme Court that the title acquired under a document which is subsequently registered would relate back to the date of its execution. This argument was in terms repelled by the Supreme Court referring to its earlier decision in Ram Satan's case, AIR 1961 SC 1747. The Supreme Court observed (p. 250)
“Mr. Desai argued that under section 47 of that Act once registration is effected, the title under the sale deed relates back to the date of its execution and, therefore, though registration was completed on November 30, 1964, the transferee's title under the sale related back to the date of the execution, i.e, October 9, 1964. Assuming, therefore, that the application was presented on November 26, 1964, the transferee's title having related back to the date of the execution of the sale deed, the transfer must be deemed to be completed on that date, and, therefore, it was not correct that the right of reconveyance had not accrued to the appellant on November 26, 1964, or that the Collector had no jurisdiction on that date, to accept the said application. This contention, however, cannot be accepted, in view of the decision in Ram Saran hall v. Mst. Domini Kuer [1962] 2 SCR 474 : AIR 1961 SC 1747, where this court rejected an identical contention. Mr. Desai tried to distinguish that case on the ground that it was based on Mahomedan law which by custom applied to the parties there. But the decision is based not on any principle of Mahomedan law but on the effect of section 47 of the Registration Act. The majority decision clearly laid down that the sale there was completed only when registration of the sale deed was completed as contemplated by section 61 of the Registration Act and, therefore, the talab-i-mowasibat made before the date of completion of registration was premature and a suit based on such a demand of the right of pre-emption was premature and must, therefore, fail. Similarly, in Radhakishan L. Toshniwal v. Shridhar [1961] 1 SCR 248 : AIR 1960 SC 1368, this court laid down that where a statute providing for the right of pre-emption lays down that it accrues only when transfer of the property takes place and such transfer is not complete except through a registered deed, a suit filed before the sale deed is executed is premature as the right of pre-emption under the statute did not accrue till the transfer became effective through a registered deed.”
(underlined by us).
18. In our view, the decisions of the Supreme Court squarely apply to the facts of this case. The transfer is not effective until registration of the deed of transfer, whether by gift or sale. The effective date would be the date of registration and not the date of execution. Before registration of the deed, section 47 has no application and before registration of the deed, the gift does not become effective. As observed by the Supreme Court, the object of section 47 is to decide which of the two or more registered instruments in respect of the same property is to have effect. Although, by virtue of section 47, a document when registered is permitted to operate from a date anterior to registration, the gift or sale made by the said document cannot be said to have been completed earlier to the date of registration. The gift is not complete until the registration. Accordingly, the date of registration of the deed of gift would be relevant for the purpose of gift-tax assessment.
19. There is another aspect of the matter. It may be that, as between the donor and the donee, the registered document may take effect from the date of execution but, as regards a third party, the point of time at which the deed becomes effective is when it is registered. If the registered document is held to be effective against the Revenue which is not a party to the deed from the date of execution, it will entail great hardship, because the Revenue will have no knowledge of the date of execution of the document, and the document can only be effective against the Revenue from the date of registration. The date of gift in the present case so far as the Revenue is concerned would, therefore, be not the date when the document was executed but the date when it was registered.
20. For the foregoing reasons, the question in this reference is answered in the negative and in favour of the Revenue and against the assessee. There will be no order as to costs.
Bhagabati Prasad Banerjee, J.:— I agree.