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Gift-tax Act
Gift Tax Act, 1958/Indian Succession Act, 1925: Section 5(1)(xi)/Section 191-Gift in contemplation of death- Essential requirements of-Gift of movable property-Donor seriously ill at the time of execution of deed and died shortly thereafter-Delivery of possession of gifted property effected-No indication in the document specifically or impliedly that gift would be effective only if donor died or liable to be revoked in case donor recovered-Whether gift valid-Whether entitled to exemption. Mohammedan Law: Marz-ul-maut (death-bed illness)-What is-Gift made during marz-ul-maut-Whether entitled to exemption under Gift Tax Act-Section 191, Indian Succession Act-Applicability of. =Gift to certain movable assets was made to the respondent assessee by a Muslim businessman, when he was seriously ill, and died of the illness after six weeks of the execution of the document. In gift-tax assessment proceedings, the assessee claimed exemption for this gift under Section 5(1)(xi) of the Gift Tax Act, 1958, on the ground that the gift was made in contemplation of death. The Gift Tax Officer rejected the claim. But, on appeal, the Appellate Assistant Commissioner allowed the exemption relying on the circumstances under which the gift was made and the events followed thereafter and the evidence of the Sub-Registrar, who was brought to residence for effecting registration, and the doctor, who was treating the donor. On appeal by the Gift-Tax Officer, the Tribunal affirmed the finding of the Appellate Assistant Commissioner regarding the donor’s illness but did not allow the exemption on the ground that, though there was delivery of possession of the gifted movables, the gift was unconditional and absolute, since it had not been specifically expressed or impliedly present in the deed that the gift must revert back in the event of the donor recovering from illness and that the gifted property had to be kept as a gift in case the donor died of his illness. However, on a reference made at the instance of the assessee for opinion, the High Court held that such a condition need not be mentioned in the deed and 847 it could be inferred from the attending circumstances of the gift, and since the donor was actually sick at the time of execution of the deed and died of the same illness without recovery, after a short period, the gift in question was made in contemplation of death and therefore, entitled to exemption from tax under Section 5(1)(xi) of the Act. In the appeal before this Court, on behalf of the Department it was contended that the gift in contemplation of death should be conditional, and in the absence of indications in the document to the effect that if the donor did not die, he should be entitled to remain in complete domination of the gifted property, the gift would become inter vivos and absolute, and that the exemption under Section 5(1)(xi) of the Gift Tax Act was not available to the assessee, since Section 191 of the Indian Succession Act was not applicable to marz-ul-maut gift. Dismissing the appeal by the Department, this Court HELD: 1.1 Explanation (d) to sub-section (2) of Section 5 of the Gift Tax Act, 1958 states that a gift made in contemplation of death has the same meaning as in Section 191 of the Indian Succession Act, 1925. The requirements of a gift in contemplation of death as laid down by Section 191 are: (i) the gift must be of movable property; (ii) it must be made in contemplation of death; (iii) the donor must be ill and he expects to die shortly of the illness; (iv) possession of the property should be delivered to the done; and (v) the gift does not effect if the donor recovers from the illness or the donee predeceases the donor. These requirements are similar to the constituent elements of a valid donatio martis causa. [853C-E] Cain v. Moon, [1893] 2 Q.B. 283 @ 286, referred to. 1.2. In the instant case, all the conditions prescribed, except perhaps the last one are found present by the fact finding authorities. [853G] 1.3. The recitals in the deed of gift are not conclusive to determine the nature and validity of the gift. The party may produce evidence aliunde to prove that the donor gifted the property when he was seriously ill and contemplating his death with no hope of recovery. These factors in conjunction with the factum of death of the donor may be sufficient to infer that the gift was made in contemplation of death. It is implicit in such circumstances that the donee becomes the owner of the gifted property only if the donor dies of the illness and if the donor recovers from the illness, the recovery itself operates as a revocation of the gift. [854B-C] 848 1.4 It is not necessary to state in the gift deed that donee becomes owner of the property only upon the death of the donor. Nor it is necessary to specify that the gift is liable to be revoked upon the donor’s recovery from the illness. The law acknowledges these conditions from the circumstances under which the gift is made. [854C-D] Halsbury’s Laws of England, 4th Edn. Vol. 20 p. 41 para 67; Jerman on Wills, 8th Edn. Vol, 1 p. 46-47; Williams on “Executors and Administrators”, 14th Edn. p. 315, and Corpus Juris Secundum, vol. 38 p. 782 and p. 917 para 110, referred to. 1.5 In the light of this and in view of the findings recorded by the Tribunal about the serious sickness of the donor and his state of mind at the time of making the gift in question, it can be reasonably concluded that the gift was not absolute and irrevocable. On the contrary, it would be legitimate to infer that the gift was in contemplation of death. any other view would be inappropriate. [856A-B] 2.1 Marz-ul-maut is also entitled to exemption from gift tax under Section 5(1)(xi) of the Gift Tax Act, 1958. [856B] 2.2 The exemption to gift in contemplation of death is provided under Section 5(1)(xi) of the Gift Tax Act, and not under Section 191 of the Indian Succession Act, Section 191 furnishes only the meaning or requirements of gift in contemplation of death. It a gift in contemplation of death is recognised by the personal law of parties satisfying the conditions contemplated under Section 191 of the Indian Succession Act, cannot be denied exemption under Section 5(1)(xi) of the Act, Even assuming that Section 191 as such will not be applicable to the parties. [856C-D] 2.3 Under Mohammedan Law gift made during marz-ul-maut (death-bed-illness) is subject to very strict scrutiny and subject to all other conditions necessary for the validity of a hiba or gift, including delivery of possession of the donor to the donee. [856D] Mulla’s Mohammedan Law, pp. 111 Sections 135 & 136, referred to. 2.4 Marz-ul-maut is a malady which induces an apprehension of death inthe person suffering from it and which eventually results in his death. There are three tests laid down to determine whether illness is to be regarded as marz-ul-maut. They are; (i) Proximate danger of death 849 so that there is preponderance of khauf or apprehension that at the given time death must be more probable than life. (2) There must be some degree of subjective apprehension of death in the mind of the sick person. (3) There must be external indicia chief among which would be the inability to attend to ordinary avocations. [856E-F] Rashid Karmalli and anr. v. Sherbanoo, [1907] 31 ILR Bombay 2641, referred to. 2.5 Therefore, under the Principles of Mohammedan Law, the gift made in marz-ul-maut could be regarded as gift made in contemplation of death, since it has all the requisites prescribed under Section 191 of the Indian Succession Act, 1925. The only limitation is that the disposition is restricted to a third on account of the right of the heirs. [857C-D] Syed Ameer Ali: Mohammedan Law, Vol. 1, 4th Edn. 1985 p. 59-60, referred to. =1991 AIR 1847, 1991( 2 )SCR 846, 1991( 3 )SCC 520, 1991( 2 )SCALE11 , 1991( 3 )JT 67
PETITIONER: COMMISSIONER OF GIFT TAX, ERNAKULAM Vs. RESPONDENT: ABDUL KARIM MOHD. (DEAD) BY LRS. DATE OF JUDGMENT10/07/1991 BENCH: SHETTY, K.J. (J) BENCH: SHETTY, K.J. (J) YOGESHWAR DAYAL (J) CITATION: 1991 AIR 1847 1991 SCR (2) 846 1991 SCC (3) 520 JT 1991 (3) 67 1991 SCALE (2)11 ACT: Gift Tax Act, 1958/Indian Succession Act, 1925: … Continue reading
Gift Tax Act, 1958: Sections 2(xii), 4(1) (c) and (d)-Gift of immovable property by unregistered document-Held, for a valid gift under Section 2 (xii) and (4) compliance with the provisions of Transfer of property Act and Registration Act necessarv- transfer of Properly Act, 1882-Sections 122 and 123-Registration Act, 1908- Sections 17. Words & Phrases . “Gift”-Meaning of in the context of Section 2(xii) of Gift Tax Act, 1958 and Section 122 of the Transfer of Property Act, 1882. Respondent, by an unregistered declaration sought to make a gift of certain immovable property to his wife. The Gift Tax Officer held that no valid gift had been made by respondent since the provisions of Section 123 of the Transfer of Property Act, 1882 had not been complied with. The said Findings were affirmed by the Assistant Commissioner and the Tribunal. However, on reference, the High Court observed that the definition of the word ‘gift’ under the Gift Tux Act, 1958 was wider than the definition of ‘gift’ in the Transfer of Property Act, and held that registration of document was not necessary for a valid gilt under Section 4 of the Act. Hence the present appeal by Revenue. -Allowing the appeal, the Court HELD : 1.1. High court erred in coming to the conclusion that the case fell within the provisions of Section 4 of the Gift Tax Act, 1958 and, therefore, as it was a deemed gift it was not necessary that the document had to be registered. [619-H; 620-A] 1.2. 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 which in certain circumstances is to be regarded as a gift under Section 4 there has to be a transfer of immovable property and a transfer by reason of Section 17 of the Registration Act can only be by way of a registered document. Surrender or forfeiture of an interest in immovable property as contemplated by Section 4(1) (c) or vesting of any property in another person as contemplated by Section 4(1) (d) in the case of an immovable property would also attract the provisions of Section 17 of the Registration Act. [618-G-H; 619-A, B, C] 1.3. In order that there could 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. 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. [617-F, 619-G-H] Commissioner of Gift Tax, Kerala v. R. Valsala Amma, 82 ITR 828 (SC), relied on. Smt. Padma Lalchand Mirchandani v. Commissioner of Income Tax, New Delhi, 128 ITR 174 (Delhi); Commissioner of Gift-tax, Bombay III v. Matilda Ferreira, 112 ITR 934 (Bombay); K. Madhavakrishnan v. Commissioner of Gift- tax, Tamil Nadu, 124 ITR 233 (Madras) and Darbar Shivrajkumar v. Commissioner of Gift-tax, Gujarat-IV, 131 ITR 647 (Gujarat), approved. CIVIL APPELLATE JURISDICTION : Civil Appeal No. 6725 of 1994. From the Judgment and Order dated 12.2.1985 of the Rajasthan High Court in Income Tax Ref. No. 27/75. B.B. Ahuja, K.C, Kaushik, Rajiv Tyagi, R.R. Dwivedi and B.V. Balram Das for Ms. Sushma Suri for the Appellant. N.M. Ranka, Sushil Kumar Jain and Raj Kumar Yadav for the Respondent.
CASE NO.: Appeal (civil) 6725 of 1994 PETITIONER: COMMISSIONS OF INCOME TAX, JAIPUR RESPONDENT: SIKBHMAL NAWALAKHA DATE OF JUDGMENT: 16/08/2001 BENCH: B.N. KIRPAL & SHIVRAJ V. PATIL JUDGMENT: JUDGMENT 2001 Supp(1) SCR 615 The Judgment of the Court was delivered by KIRPAL, J. The respondent was the owner of immovable property and by declaration dated … Continue reading
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