GIFTS UNDER TRANSFER OF PROPERTY ACT

GIFTS UNDER TRANSFER OF PROPERTY ACT

The transfer of property act 1882 deals with provisions related to transfer of property in India. Gift is the transfer of any existing property whether moveable or immoveable, made voluntarily, with no consideration, from the donor to the donee.

• Introduction

The transfer of property act 1882 deals with provisions related to transfer of property in India. This act came into force on 1st July 1882 and it deals with what constitutes transfer and conditions attached to it. According to this act, ‘transfer of property’ means an act where one person gives the property to one or more person or himself and one or more other persons, whether in present or future. The person may include an individual or company or associations or body of individuals.

The property transferred may be of two types: –

1. Movable property
2. Immovable property

Immovable property does not include grass, growing crops or standing timber. According to section 3(26) of general clauses act 1897, immovable property includes land, benefits to arise out of the land and things attached to the earth or permanently fastened to anything attached to the earth. The registration act 1908,2(6) also lays emphasis on what should be included in immovable property.

According to this act land, buildings, hereditary allowances, rights to ways, lights, ferries, fisheries or any other benefit to arise out of the land and things attached to the earth or permanently fastened to anything which is attached to the earth, but not standing timber, growing crops nor grass are all included in immovable property.

• Eligibility for Gift under Transfer of Property Act

Any person who is competent to contract is eligible to transfer property either in whole or in part. The transfer may be made orally unless there is specific requirement under any law for the transfer to be in writing. In circumstances where a person is physically unable to sign any contract but is mentally competent, the lawyer under such person, can sign such contract with the help of power of attorney.

• Concept of gift as under transfer of property act

Gift is the transfer of any existing property whether moveable or immoveable, made voluntarily, with no consideration, from the donor to the donee.

• Acceptance of gift when to be made

The acceptance of gift must be made whilst lifetime of the donor and while he is capable of giving. However, if the donee dies before acceptance, the gift becomes void. Section 122 defines “gift” which includes inter vivos or an absolute gift. However, there are other kinds of gift too: –

1. Gift of personal property (Gifts mortis causa) –

This gift is made when there is expectation of donor’s death and when there is condition that donor will die as anticipated.

2. Gifts by will

Gifts mortis causa is not included under transfer of property by section 129. gifts by will also, are outside the scope of this act and limitation of this gift are included in the Indian Succession Act. However, only gift inter vivos or absolute gift are covered under the purview of this act which is transfer of gift between the living and which becomes absolute during the lifetime of donor and the donee.

At the time of marriage of daughters and sisters, gift of land, is not to be regarded as a gift within the meaning of sec.122. 

• Essential ingredients of gift inter vivos under Transfer of Property Act

1. lack of consideration
2. donor
3. donee
4. subject matter (property gifted)
5. donative intention
6. delivery to donee
7. acceptance by done

If the requirements of sec.122 of transfer of proper act read with sec.17 of registration act are satisfied then the gift is said to be a valid one.

• Gift or will, test of – The fact whether a document is a gift or will depends on intention gathered from the words used. Test includes: -the name of the documents its registration reservation of the power to revoke use of the future or present tense
• Gift by life estate holder- Gift transferred by a life estate holder can bind the reversioners only during the lifetime of the donor and not after his/her death.
• Property– Only transfer of gift of tangible property falls under this act. therefore, any release of a security without consideration also does not fall under this act.
• Existing property- An existing property is an essential ingredient to constitute a valid gift. Under sec 6, the property must be transferable and the subject matter of gift must be certain moveable or immoveable property. Where there is gift of certain amount by entries in the books of accounts by credit or debit, the amount must be recorded in the account of the firm.
• Gift of some amount in cash- In case when there is transfer of some amount, it need not be registered nor does it have to comply with any of the requirements contained in sec 122 and 123.
• Property dedicated to God, if a gift- Under sec 123 of T.P Act, transfer of property to God by a Hindu is not a valid gift. Hence such dedication may be made without any registered instrument.

• Transfer how effected

In case where gift of immoveable property is made, it must be with respect to a registered instrument and which must be signed by or on behalf of the donor as well as attested by at least two witnesses. In case of gift of moveable property transfer may be by registered instrument or by delivery.