W.T.As. Nos. 189 and 190(PB) of 1998-99, decided on 29th June, 2002. VS W.T.As. Nos. 189 and 190(PB) of 1998-99, decided on 29th June, 2002., 2003 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 210 (2002)

Wealth Tax Act (XV of 1963)‑‑‑

‑‑‑‑S. 16‑‑‑Assessment‑‑‑Gift‑‑‑Assessing Officer rejecting the contention of the assessee that he had gifted a portion of the property included the same in net wealth‑‑‑First Appellate Authority excluded the value of gifted portion from the assessment of the assessee‑‑‑Validity‑‑‑Alleged gift deed was executed on 13‑7‑1988 but from the very start the assessee was declaring such property as his own‑‑‑If gift was a genuine document, then why it was not produced before the Assessing Officer at the earliest possible opportunity‑‑‑In the gift deed the assessee had stated that possession of the gifted property had been delivered to the donee i.e. his mother but his statement dated 26‑2‑1997 was available on the departmental record wherein he had stated that he was living in the upper portion of the said property and according to the statement of assessee, this was the same portion which had been gifted to the mother‑‑ Apparently both the donor and the donee were living in the same portion‑‑‑If the donee was not living in the alleged gifted portion of the said property, then she was not in possession of the same and no question of gift arose‑‑‑If the donee was jointly living with her son the donor, then gift deed had not been incorporated in the Municipal record‑ ‑Gift was not valid and the Assessing Officer had rightly rejected the same and order of the First Appellate Authority was not maintainable‑‑ Order of the First Appellate Authority was set aside and the assessment order was restored by the Appellate Tribunal.

1975 PTD 12 distinguished.

Mahomedan Law by D.F. Mulla 1985 Edn. and 1973 PTD 329 ref.

Qaisar Ali Khan, D.R. for Appellant.

Humayun Khan Rohaila ITP for Respondent.

Date of hearing: 29th June, 2002.

ORDER

FAZLUR REHMAN KHAN (JUDICIAL MEMBER). ‑‑‑These two departmental appeals are directed against the order, dated 19‑5‑1998 of the learned Commissioner of Income‑tax/W. Tax (Appeals‑II), Faisalabad Camp at Peshawar whereby appeals of the assessee- respondent for the assessment years 1995‑96 and 1996‑97 were partially accepted.

2. The brief facts, giving rise to these appeals, are that the respondent is an individual and owner of a market, known as Jan Market at Chowk Nasar Khan, Peshawar City, consisting of 17 shops/rooms. He filed wealth tax return for 1995‑96, declaring value of the market at Rs.10,20,000 on the basis of GALV at Rs.1,02,000 for each of the assessment years under appeals. During the assessment proceedings, the respondent took a plea that he had gifted the second flour of the market to his mother Mst. Mira Jan through a gift deed dated 13‑7‑1988. However, this plea was rejected and the entire wealth was assessed in the case of the respondent at Rs.17,00,000 for 1995‑9.6 and at Rs.18,00,000 for 1996‑97. Feeling aggrieved, the respondent went in appeals and the learned CIT(A) vide his order quoted above, allowed the plea of the respondent and excluded the value of the second portion at Rs.5,00,000 from the assessment of the respondent. The department is aggrieved by the order of the learned CIT(A) and has filed the present appeals.

3. We have heard the learned representatives of the parties and have also perused the record.

4. While accepting the plea of gift, the learned CWT(A) has placed reliance on the following observations made in the case reported in 1975 PTD 12:‑‑

"Notwithstanding the amendment of section 49 of the Registration Act by Registration Amendment Ordinance, 1962 the unregistered gift deeds were admissible in evidence. The donor and the donee were governed by Muslim Law and execution of the documents was not sine qua non for the validity of the gift. The impugned gift had to be examined with reference to the provisions of Muhammadan Law and that no sooner it was clear that there had been a delivery of possession of the donated property, the gift was complete and irrecoverable, for the parties were related in prohibited degrees.

A gift by a Muslim would be completed even if there is not writing and it depends for its validity upon (1) a declaration of gift by the donor; (2) acceptance of the gift expressly or impliedly by or on behalf of the donee; and (3) delivery of possession of the subject‑matter by the donor to the donee. If these three conditions are complied with the gift is complete. Registration of the document will not be helpful if either of the aforementioned conditions are not satisfied. A written instrument in any case would not create a gift but is a mere evidence of the gift and as such would not in the case of a Musalman require registration. "

5. However, the original authority in which the foregoing observations had been made was neither produced at the time of arguments nor is available in the library of the Tribunal but from the perusal of the Departmental record we find that the foregoing observations are not applicable to the present case on the grounds firstly; that the alleged gift deed was executed on 13‑7‑1988 but from the very start, the respondent is declaring the plaza at his own hands. If it was a genuine document, then the question is to why it was not produced before the Assessing Officer at the earliest possible opportunity. Secondly; in the gift deed the respondent has stated that possession of the gifted property had been delivered to the donee i.e. his mother but his statement dated 26‑2‑1997 is available on the departmental record where in he has stated that he is living in the upper portion of the plaza and according to the statement of A.R. of the respondent, as per impugned assessment order, this is the same portion which has been gifted to the mother. It appears that both the donor and the donee are living in the same portion and as per sub‑para. (3) of para. 152 of the Mahomedan Law by D.F. Mulla 1985 Edition delivery of possession will not be complete unless some overt act is done by the donor. This sub‑clause reads:‑‑

"152. Delivery of possession of immovable property.‑‑‑ (1) to

(2) ...................................................................

(3) Where donor and donee both reside in the property. No physical departure or formal entry is necessary in the case of a gift of immovable property in which the donor and the donee are both residing at the time of the gift. In such a case the gift may be completed by some overt act by the donor indicating a clear intention on his part to transfer possession and to divest himself of all control over the subject of the gift (1). The principle for the determination of questions of this nature was thus stated by West, J., in a Bombay case (m). `When a person is present on the premises proposed to be delivered to him, a declaration of the person previously possessed puts him into possession .... Without any physical departure or formal entry."

6. To the foregoing‑sub‑para., the following note by the author is worth perusal:

"Where the donor and donee reside together in a house, it is not necessary to depart from the house but some overt act showing that the donor has divested himself of the property is sufficient. In the cited case papers were handed over and the donor consented to record the name of the donee in the Municipal records, it was held that the condition about delivery of possession was satisfied. S.M.S. Saleem Hashmi v. Syed Abdul Fateh 72 Pat. 279."

7. Under para. 154 of the same book the author has cited another case at (b) which is also worth perusal and the same reads, "a gift of Zamindari rights, held under Government, may be completed by mutation of names in the books of the Collector: Sajjad Ahmad Khan v. Kadri Begum (1895) 18 All. 1.

8. In a case reported in 1973 PTD 329, the deceased, a Muslim, had transferred some of his properties to his sons and daughters by an oral gift known as Hiba, more than two years before his death. Though the gift was made in 1954, no steps were taken to mutate the properties in favour of the donees. The deceased lived in the same house alongwith his sons and the income from it was utilized for the purpose of the family of which the deceased was a member. The department invoked section 10 of the Estate Duty Act and included the properties in the estate of the deceased and on a reference their Lordships of a Division Bench of the Patna High Court (India) upheld the action of the Department.

9. If the donee is not living in the alleged gifted portion of the plaza, then she is not in possession of the same and no question of gift arises. However, if she is jointly living with her son, the donor, then gift deed had not been incorporated in the Municipal Record and, in view of the foregoing authorities, the gift is not valid and the learned Assessing Officer has rightly rejected the same. As such the impugned order of the learned CWT(A) is not maintainable.

10. As a result, this appeal is accepted, the impugned order of the learned CWT(A) is set aside and the assessment order is restored.

C.M.A./496/Tax(Trib.) Order accordingly.