Latest Notification on Gift Deed: Kolkata High Court
Case- “Dinabandhu Mondal v. Laxmi Rani Mondal” (decided on 17-06-2019) pronounced that it is not essential for the ‘validity of a gift deed’ that it needs to be registered by the donor himself. After the donor’s death, any succeeding registration of a gift deed at the occurrence of the donee does not offend U/s 123 of the Transfer of Property Act, 1882.
If the transaction appears to be unconscionable, it was observed that the burden of proof might be reversed in that case. However, the same could not be proved in the present case. As a result, the decision of the trial court was restored, and the appeal was allowed.
What do You mean by Acceptance of Gift Deed in Detail?
Acceptance of Gift Deed
Acceptance of the gift must happen before the death of the donee as acceptance is a legal requirement. If the donee starts collecting rent from the Property, it can be assumed as implied acceptance. It cannot be canceled unless it is a conditional gift as soon as a valid gift has been accepted.
Conditional Gift Deeds
If a gift deed turns invalid if a specific condition that had to be fulfilled was not, it is known to be a conditional gift. Conditions cannot be added later and must have to be made before or at the time of making the gift. A condition has to be something that is not in the donor’s control or uncertain by nature. The donee gains absolute right in the Property depending on the rights set in the gift deed after acceptance.
Minor Acceptance
There is one exception, while anyone who owns the property is supposed to be able to gift it. Minor not allowed transferring the Property because they are legally not eligible to form a contract. This means a gift deed wherever the minor is the donor is void and illegal.
On the other hand, a legal guardian can accept the gift on the minor’s behalf, which means that a minor can also be done. Minor will be given the option of either accepting the gift or returning when the minor is of legal age.
Acceptance Under Undue Influence or Fraud
Whenever donee uses his position of power or authority over the donor to acquire the gift, it is called an Undue influence. In such cases, the ‘burden of proof’ is on the done to justify that there was no undue influence. The gift deed becomes voidable in case undue influence is proven. If the gift deed is forged through lies and deceit, in that case, then it is known as Fraud or fraudulent action.
What are the Possibilities of Gift Deed Getting Revoked /Canceled?
A gift cannot be revoked once made and registered with due process of law. It becomes the donee’s property after the acceptance, in which the donor cannot self-sufficiently revoke the deed. Also, there is donor’s mere will in a deed, where the parties have agreed that the deed will be revocable in part or whole is not known to be a valid Gift Deed.
Nevertheless, there are specific grounds when gifts can be revoked under Section 126 of the Transfer of Property Act, 1882. The revocation incorporates the possession of the Property, which gets returned by the cancellation of Gift Deed to the donor.
There are Several Grounds, Which are as Follows:-
- If certain specified events happen or do not happen, then the gift shall be revoked if there is any agreement between the donor and donee.
- Moreover, the occurrence of such an event must not be controlled by the donor, where both parties must have agreed to such a circumstance/ contingencies in terms of the Gift Deed.
- The conditions stipulated should not be illegal, immoral, or disgraceful to the Property.
- Case law: Hon’ble Supreme Court stated in the case of Thakur’ Raghunathjee Maharaj v. Ramesh Chandra”, that “the condition would be valid and enforceable, even though a condition has been provided under a mutual agreement separately. However, it forms part of the transaction of the gift which is not laid down in the Gift Deed in itself.
- The ‘agreement is a contract’ voidable at the option of the party whose consent was so obtained where consent to an agreement is caused by undue influence, coercion, misrepresentation or fraud,”
- Thus, it can be revoked if the gift was made by obtaining consent on the above grounds. Donor’s heirs have the right to file for revocation of the deed in case if he dies.
What is the Taxability of Gifting a Property via Gift Deed?
Where any person receives from any person after the 1st day of April 2017 any sum of money, without consideration Under Income Tax Act 1961, Section 56(2)(x), the whole of the aggregate value (exceeds fifty thousand rupees) shall be taxable under the head “Income from other sources.
The Given Clause shall not Apply to the Following Persons are Mentioned Below:-
- Marriage occasion of the individual
- Death of payer/donor
- By inheritance/Will
- From any local authority
- From any relative
- From any Institution registered under section 12A or section 12AA; or
- From any Institution referred to in clause (23C) of section 10
- From any establishment for the benefit of the “relative of the individual”.
- Any institution referred to in sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) of clause (23C) of section 10; or
- Any transaction not regarded under clause (i)/20[clause (iv)/clause (v)]/clause (vi)/clause (via)/clause (viaa)/clause (vib) or clause (vic)/clause (vica)/clause (vicb)/clause (vid)/clause (vii) of section 47
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