Law:

Section:

Section 4 of the Income-tax Act, 1961 - Income - Assessability of - Assessee, a muslim lady now deceased, had made oral gifts of a house and a vacant piece of land - Confirmation deeds remained unregistered - ITO held that gifts were true but legally invalid in absence of registered documents and assessed income from gifted properties in donor-assessee's hands - Whether tribunal correct in holding that since donor no more held gifted properties, income therefrom was not assessable in her hands - Held, on facts, yes FACTS The assessee, a Muslim lady (now deceased), had made oral gifts of a house and a vacant piece of land. The written memoranda, made out either subsequent to or contemporaneously with the gifts, were not registered. The ITO assessed the income from these gifted properties in the hands of the assessee on the ground that in the absence of registered deeds, the gifts were not valid in law though true in fact. The AAC confirmed the ITO's order. The Tribunal, however, held that the gifts being true, the donor no more held the gifted properties and the income therefrom was not assessable in her hands. On reference : HELD Under her personal law, the assessee was entitled to make an oral gift of the properties. In the case of the house property, the confirmation deed was not compulsorily registrable. The oral gift in the case of the house was, therefore, true as well as valid in law and income from it was assessable in the hands of the donees. In the case of the land, the confirmation memorandum had to be registered and the unregistered document was not admissible in evidence. However, it was undoubted that the donor had ceased to hold the land. This Court has held in the case of CIT v. Trustees of H.E.H. The Nizam's Dependants & Khanzads Trust [1983] 139 ITR 517, pertaining to wealth-tax, that once the wealth went out of the hands of the assessee, the wealth including the interest thereon could not be available for assessment of either wealth-tax or income-tax in the hands of the assessee. The ratio of that case was applicable to the facts of the instant case. Consequently, the income from both the gifted properties was not assessable in the hands…

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