Law: Income Tax Act, 1922

Section: 9

(a) Income tax---Trust Income from property transferred to trust Agreement of gift executed on 9-2-1969 Gift deed executed on 8 3 1971 and registered--Till 8-3-1971 donor continued to be owner and was liable to be assessed on income from those properties. Where a transfer is effected inter vivos by a donor to a living person, that will have to satisfy the requirements of the Registration Act. Even in a case where no document of gift is necessary, if the parties choose to reduce the transaction in writing, then the requirements of section 123 read with section 5 of the T.P. Act, as also the provisions of the Registration Act must be satisfied. The assessee who alongwith his wife, sons and their wives had created a trust executed a deed on 9 2 1969 styled as "agreement of gift" in favour of the trust. The agreement of gift stated that the donor had put the trustees of the trust in possession of the said properties from that date and that he had also undertaken to execute a document of gift and register the same as soon as exemption was obtained from the Government. After obtaining the requisite exemption the assessee executed a gift deed on 8 3 1971 and had it registered. The question arose whether income from the properties gifted to the trust could be assessed in the hands of the assessee for the assessment year 1970 71. Held, that even if the agreement, dated 9 2 1969 is taken to be actually evidencing the transaction of gift, then for want of registration the said document will be ineffective to transfer the title from the donor to the trust. The agreement, dated 9 2 1969 does not result in the transfer of ownership from the donor to the trust and, therefore, the income received by the trust after that date should be taken as the income of the assessee. (b) Income tax Income from property Legal owner only is liable. The expression "income from property" refers to income of legal owner of property who is the only person assessable to tax. Hence for the purpose of assessment, under the head "income from property", one has to go only by the ownership and not by the fact as to who is in actual receipt of the income from the property. (c) Income tax Income from…

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