1981 PLP (Trib (PTD)

ABRAR HUSSAIN NAQVI (MEMBER).‑--This is the appeal of an assessee relating to assessment year 1972‑

73. The only question involved in this appeal is as to whether the income from property can be clubbed with the income from business of the assessee. The brief facts of the case are that the assessee is a partner of a firm in which he had 25 % share. Up to the assessment year 1968‑69 the assessee also declared income from property in Market. However for the year 1969‑70 onwards he did not declare property income on the ground that he had gifted the property to his wife in lieu of dower. In the years under consideration the I. T. O. made addition of income from property at Rs. 7,310 in the following words "The assessee has not disclosed any income from property. For the year under review, this is taken at Rs. 7,310 as last year. Full facts of the case have already been discussed in the body of assessment order for 1969‑70 assessment year."

3. The A. R. pointed out that the appeals were filed before the Tribunal for the years 1968‑69 to 1971‑72 where the Tribunal discussed this question which is agitated in the present appeal. However the Tribunal maintained the orders of the Income‑tax Officer. A copy of the order of the Tribunal has also been produced by the learned A. R. The learned Authorised Representative contended that the Tribunal has in the earlier years failed to take into consideration certain provisions of law and therefore the principle of stare decisis has no application. I had the benefit of reading the order of the Tribunal passed for the earlier years by a Single Bench of the Tribunal. Before discussing the case it would be convenient to narrate the facts of this case. A plot of land was allotted to the assessee by the Lahore Improvement Trust sometimes in 1951 and the land purchase agreement was registered with the assessee on 26‑4‑1954. A building was constructed over this plot by the assessee. Subsequently the assessee made an application to the Lahore Improvement Trust informing that the afore said plot bearing No. 4‑C, S . . . . Market, had been gifted by him to his wife in lieu of Haq Mehar. The Lahore Improvement Trust accepting the request of the assessee vide its letter dated 3‑9‑1965 informed Mst. A . . . . Jan the wife of the assessee, that her name had been put in the Trust record as bargainer of the said plot. She was also informed in the same letter that she would abide by all the terms and conditions laid down in the Lease Purchase Agreement registered with her husband on 26‑4‑1954. It also appears that subsequently a sale deed was also executed by the Lahore Improvement Trust in favour of Mst. A. Jan on 20‑7‑1970. In the Excise and Taxation record also the name of Mst. A. . . Jan was entered and she had been paying the taxes in regard to the property as owner of the property. The assessee also made a declaration before a Magistrate in which it was stated that he had gifted the aforesaid plot to his wife Mst. A . . . Jan in lieu of Haq Mehar and the gift was also accepted before the Magistrate by the donee. The assessing authorities in the earlier years as well as in the assessment year under consideration rejected the claim of the assessee on the ground that a valid gift had not been made in favour of assessee's wife because (i) it was for inadequate consideration inasmuch as the value of the building was about Rs. 2,50,000 while Haq Mehar was Rs. 40,000, (ii) since it was gift Hiba Bil Awaz it amounted to sale and therefore required registration, and (iii) in any case the gift was for the plot and not for the building. The Tribunal also held that under section 16(3) (iii) of the Income‑tax Act, while computing the income of the assessee the income from assets transferred directly or indirectly to the spouse otherwise than for adequate consideration, is to be included. The A. R. however contended before me that all the reasons advanced by the assessing officer as well as by the Tribunal were against law. It was further contended that the Tribunal has failed to take into consider ation the proviso added to section 16 (3) by the Finance Act of 1964 wherein it has been stated that nothing contained in subsection (iii) and (iv) of clauses (a) and (b) would apply to any income from assets trans ferred by an assessee by way of gift. I am inclined to agree with the learned A. R. The proviso to section 16(3) excludes the transfer of assets' made by way of gift. Therefore so far as section 16(3) is concerned that' has no application in the facts and circumstances of this case if it could be shown that a valid gift had been made by the assessee in favour of hiss wife. So far as Hiba Bil Awaz is concerned the earlier view was that it was nothing but a sale and therefore registration was required where the transfer of immovable property is of the value of Rs. 100 and upwards. However in Bashir Ahmad v. Zubeda Khatoon (126 A O186) and Abdul Hamid v. Abdul Ghani ((1934) 148 I C 801), the Chief Court of Audh held that where a Muhammadan husband transfers the property to his wife in lieu of dower the transaction is not a sale. In the case Dana Mian Choudhary v. Gagan Chands Day (P L D 1955 Dacca 77), it was held that a gift in lieu of dower is Hiba Bil Awaz and delivery of possession is not essential. In another case Allah Jawai v. Allah Ditta (P L D 1975 Lah. 1399), it was held that gift of property made by a Muhammadan husband to his wife amounts to Hiba Bil Awaz and it does not require to be effected through Registered instrument. In view of these authorities, notwithstanding the fact that the gift made by the assessee was in the nature of Hiba Bil Awaz it did not require registration. Mere declara tion by the assessee and acceptance by the donee was sufficient for making a valid gift. As regards the adequacy of consideration in the leading case of Rani Khajoorun Nessa v. Roshan Jahan ((1876) 2 Cal. 184=(1871) 3 I A 291). The Privy Council held undoubtedly to adequacy of the consideration is not the question. A consideration may be perfectly valid which is wholly inadequate in amount when compared with the thing given. Some of the cases have gone so far as to say that even a gift of ring may be sufficient consideration; but whatever it amounts, it must be actually and bona fide paid". In the latter case the Privy Council has held that even a copy of Quran (Abbas Ali v. Karlin Bux ((1909) 12 C W N 160=4 I C 466), was held to be a good consideration for Hiba Bil Awaz. In another case Jarafat Mandal v. Kamrezban Bibi ((1955) 1 Cal, 144), even a Jai Namaz and Tasbi was held to be good consideration for Hiba Bil Awaz. It is therefore obvious that adequacy or otherwise of the considera tion has no relevancy for the validity of Hiba Bit' Awaz. Mere fact that the value of the property was much higher than the dower debt could not invalidate the gift made by the assessee if otherwise valid. Now I come to the evidence which has been brought by the assessee in support of his contention. The assessee has produced his declaration of gift and its acceptance by the donee which were made before the Magistrate. Since the delivery of possession was not required in this case as the property had been rented out and the gift was in favour of wife, and all the three ingredients of a valid gift having been complied with there was no room for doubting the factum of gift. In addition to this the assessee did all what he could do to transfer the property in the name of his wife. He informed the Lah6re Improvement Trust and the latter not only recorded the name of the donee in its record but subsequently made all dealings with her and ultimately executed a sale deed in her favour. Therefore as far as the plot of land was concerned there could be no doubt that the title was transferred in the name of the donee, and the department could not challenge the validity of transfer made b y the Lahore Improvement Trust in favour of the assessee's wife. Now remains the question as to whether the superstructure of the plot was also gifted by the assessee. It is true that in the declaration made before the Magistrate by the assessee as well as in the correspondence with Lahore Improvement Trust only plot has been mentioned. However the Lahore Improvement Trust was concerned only with the plot as it had made agreement in regard to plot alone and had no connection with the superstructure over the plot. One factor which goes in favour of the assessee is the fact that in the Excise and Taxation record ownership is shown as that of the assessee's wife and it is she who had been paying taxes of the Govern ment. Therefore the presumption is that the plot along with superstructure had been gifted by the assessee to his wife. There is no evidence to the contrary that notwithstanding the transfer of plot by way of gift the assessee retained the superstructure in his own possession and ownership and it cannot be said that the assessee is owner of the superstructure and the income from property is to be taken as his.

4. For the foregoing reasons 1 would hold that the assessee had transferred the property in question validly to his wife and the income there from was the income of the assessee's wife which could not be included in assessee's income. It may not be out of place to mention here that assessee's wife Mst. A. . . . Jan is separately assessed at G. I. R. No. 54 Cir. I, Sargodha and she is stated to be assessed for this income. The assessee's appeal is therefore accepted and it is directed that the addition of No. 7310 made in his income should be deleted. Appeal allowed.