I. T. A. NO.94 (IB) OF 1987-88, DECIDED ON 8TH JUNE, 1988 Versus I. T. A. NO.94 (IB) OF 1987-88, DECIDED ON 8TH JUNE, 1988

ORDER,

Brief facts giving rise to this appeal are that the assessee, who is an individual, filed a return of income to declare income from property to the extent of Rs.33,282 in respect of the charge year 1986-87, under the self-assessment scheme. However, as case of the assessee was set apart for detailed scrutiny, assessment relating to the charge year 1986-87, was finalized under section 62 of the Income-tax Ordinance, 1979 (hereinafter called the Ordinance). In consequence thereof, the Income-tax Officer by virtue of order, dated 10-6-1987, filed proceedings in respect of the assessee and directed that income from property be assessed in the hands of original allottees. In this connection, relevant part of assessment order is set out below: -

"The contention made by the assessee cannot be accepted as we cannot be sure at this stage whether the C.D.A. will transfer the building, Moreover, if it does, the ownership will be accepted from the date of transfer. Hence, proceedings are filed in this case and her share will be added back to the income of six persons who were the original allottees of the building."

2. The assessee having taken exception to the filing of proceedings in her case, filed an appeal before learned A.A.C. which was disposed of vide appeal No.1176, dated 27-4-1987. While disposing of appeal of the assessee, learned A.A.C. concluded as under:-

"The issue in this case has already been decided in my order in Appeal No. 568, dated 20-1-1987. On this basis, the Income-tax Officer is directed to assess property income as declared. "

3. The department having taken exception to the finding of learned A.A.C., filed second appeal before the Tribunal which after hearing has been disposed of today and my decision on it follows in the paras hereafter.

4. The question whether validity of gift should be considered from the date of declaration or its entry in the record of CDA, earlier came up for consideration in a case disposed of vide ITA No.313 (IB)/1987-88, dated 24-10-1987. In that case, the Tribunal vide pare 6 observed as under:-

"According to evidence on record, the assessee gifted 2/3 share of the house in favour of her two sons on 30-12-1985, and followed it by making an application to the CDA, for making necessary changes in its record. Based on this information it is my considered opinion that gift of the property stood transferred on the date of declaration of gift. In arriving at this conclusion, I have relied on 1986 Supreme Court Monthly Review 1121, wherein it was held that 'it is well-settled that gift under the Muslim Law can be orally made and no writing is essential to the validity of the gift. Nor for that matter, mutation of names in the Revenue record is a necessary requirement of giving effect to a gift under the Muslim Law. If mutation of names in the Revenue record with regard to gifted property is not a necessary requirement for giving effect to a gift under the Muslim Law then muttatis mutandis mutation of names in the CDA record was also not a necessary requirement for giving effect to a gift which stood completed on the declaration of gift by the donor, its acceptance to the donees and delivery of possession of the subject-matter of the gift by the donor in favour of the donee. In support of this conclusion, I have relied on the. fact that there was a declaration of gift by the donor in favour of the donees and its acceptance by the latter. And finally, property stood transferred in the names of the donees because there is nothing on record to establish that after the date of gift the assessee had stiff remained the owner of property. On account of this reason, provisions of subsection (3)- of section 83 of the Ordinance were, not applicable in respect of this Case as on 30-12-1985, gifted property stood transferred in the name of the two donees. By way of abundant' caution, it may also be stated here that the assessee with a view to formulise the gift according to the CDA requirement which is not the requirement of Muhammadan Law also applied to it for making necessary entries in its record. The fact that such entries were made sometime in September, 1986, did not invalidate the gift as held in 1986 Supreme Court Monthly Review 1121. Therefore, on the facts of this case, learned A.A.C. rightly concluded that the assessee could only be charged to tax in respect of her 1/3 share in the house from the date of declaration of the gift. In this view of the matter, departmental appeal which is devoid of, any merit is hereby dismissed."

5. On the ratio of above decision, it is hereby held that gift of property was valid from the date of its declaration. Therefore, in my considered opinion, learned A.A.C. rightly ordered that income disclosed by the assessee should be charged to tax in her hands for the charged year 1986-87. In consequence thereof, departmental appeal which is devoid of any merit, stands dismissed.

M.B.A./542/T Appeal dismissed.