The gift deed says nothing about taking anything back, so surely the transfer is irrevocable and ss.61 to 63 cannot apply?
The deed is not the only place to look. Section 63 enlarges the meaning of 'revocable transfer'; it does not confine it. Where the general law that governs the parties itself allows the transfer to be cancelled at will — there, Article 1181 of the Portuguese Civil Code permitting gifts between spouses to be freely cancelled by the donor — the transfer is revocable within s.61 and the income is chargeable in the transferor's hands.
Decided by the High Court (Dr B.P. Saraf J (author, as printed in the report header)) on 1993-08-30, reported as [1994] 206 ITR 438 (Bom); reference under s.256(1). It bears on section 61, section 63, section 62, section 60, section 256(1) of the Income Tax Act 1961, in Gifts, Shares & Angel Tax, How Tax Law Is Read and Assessment & Scrutiny matters.
This is the point most often missed when a clubbing or trust question is answered by reading only the instrument. Sections 60 to 63 have to be read together: s.63 is a deeming provision aimed at bringing in transfers that might otherwise fall outside the expression, and reading it as a definition that displaces the ordinary legal meaning turns its purpose upside down. The practical reach goes well beyond Goa and the Portuguese Civil Code — any personal law, statute or general law under which the transferor retains a power to revoke feeds into s.61, whether or not the document says so.
Binding within that High Court's jurisdiction. Persuasive elsewhere.
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The assessees were governed by the Portuguese Civil Code. Mr Govind Ghanekar made gifts of money to his wife, Premabai. There were no written instruments of gift. The Income-tax Officer included the income arising from the gifted property in the assessment; the Appellate Assistant Commissioner excluded it, and the Tribunal, while acknowledging that Article 1181 of the Portuguese Civil Code permits gifts between consorts to be freely cancelled at any time by the donors, held that revocability under that law was irrelevant to the application of s.61. The question referred was whether, having regard to the relevant and appropriate provisions of the Portuguese Civil Code, the gifts made by Govind Ghanekar to his wife inter vivos were 'revocable transfers' within the meaning of s.61 read with s.63 of the Income-tax Act, 1961.
The question was answered in the affirmative, in favour of the Revenue and against the assessee (para 13). Article 1181 of the Portuguese Civil Code, being applicable to the gifts in question, showed that gifts by a husband to his wife are revocable gifts (para 11). Section 63 does not have the effect of rendering gifts which are revocable by operation of law or otherwise, irrevocable (para 12). The gifts were therefore revocable gifts within the meaning of s.61 (para 13).
The Court read ss.60, 61, 62 and 63 conjointly and held that what is a revocable transfer will depend on various factors including the operation of law, so that if the law itself provides that a certain transfer shall be revocable it cannot be held irrevocable by reference to s.63 (para 8). It characterised s.63 as a provision whose object is to enlarge the meaning of 'revocable transfers' for the purposes of ss.60, 61 and 62 by bringing in certain transfers that might or might not otherwise fall within the expression, and held expressly that it is not intended to restrict the normal meaning of the expression (para 8). On a careful reading of ss.61, 62 and 63 the Court concluded that 'revocable transfer' is used in the sense in which it is understood in the legal world, subject only to the enlargement of scope effected by the deeming provision in s.63 (para 9). It then set out Article 1181, under which gifts between consorts may be freely cancelled at any time by the donors without the wife needing authorisation and with the cancellation required to be expressed, and applied it (paras 10 and 11).
What is a revocable transfer will depend on various factors including, of course, the operation of law.
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Handle my notice → Ask a CA on WhatsAppThe deed is not the only place to look. Section 63 enlarges the meaning of 'revocable transfer'; it does not confine it. Where the general law that governs the parties itself allows the transfer to be cancelled at will — there, Article 1181 of the Portuguese Civil Code permitting gifts between spouses to be freely cancelled by the donor — the transfer is revocable within s.61 and the income is chargeable in the transferor's hands. This was decided by the High Court (Dr B.P. Saraf J (author, as printed in the report header)) and bears on section 61, section 63, section 62, section 60, section 256(1) of the Income Tax Act 1961. It is reported as [1994] 206 ITR 438 (Bom); reference under s.256(1). This is the point most often missed when a clubbing or trust question is answered by reading only the instrument. Sections 60 to 63 have to be read together: s.63 is a deeming provision aimed at bringing in transfers that might otherwise fall outside the expression, and reading it as a definition that displaces the ordinary legal meaning turns its purpose upside down. The practical reach goes well beyond Goa and the Portuguese Civil Code — any personal law, statute or general law under which the transferor retains a power to revoke feeds into s.61, whether or not the document says so. If it applies to you, the first step is this: When advising that a transfer is irrevocable, check the law governing the parties and the property as well as the document — a power to revoke conferred by the general law is enough.
The assessees were governed by the Portuguese Civil Code. Mr Govind Ghanekar made gifts of money to his wife, Premabai. There were no written instruments of gift. The Income-tax Officer included the income arising from the gifted property in the assessment; the Appellate Assistant Commissioner excluded it, and the Tribunal, while acknowledging that Article 1181 of the Portuguese Civil Code permits gifts between consorts to be freely cancelled at any time by the donors, held that revocability under that law was irrelevant to the application of s.61. The question referred was whether, having regard to the relevant and appropriate provisions of the Portuguese Civil Code, the gifts made by Govind Ghanekar to his wife inter vivos were 'revocable transfers' within the meaning of s.61 read with s.63 of the Income-tax Act, 1961. The matter was decided on 1993-08-30 by the High Court (Dr B.P. Saraf J (author, as printed in the report header)). On those facts the High Court held as follows. The question was answered in the affirmative, in favour of the Revenue and against the assessee (para 13). Article 1181 of the Portuguese Civil Code, being applicable to the gifts in question, showed that gifts by a husband to his wife are revocable gifts (para 11). Section 63 does not have the effect of rendering gifts which are revocable by operation of law or otherwise, irrevocable (para 12). The gifts were therefore revocable gifts within the meaning of s.61 (para 13).
The Court read ss.60, 61, 62 and 63 conjointly and held that what is a revocable transfer will depend on various factors including the operation of law, so that if the law itself provides that a certain transfer shall be revocable it cannot be held irrevocable by reference to s.63 (para 8). It characterised s.63 as a provision whose object is to enlarge the meaning of 'revocable transfers' for the purposes of ss.60, 61 and 62 by bringing in certain transfers that might or might not otherwise fall within the expression, and held expressly that it is not intended to restrict the normal meaning of the expression (para 8). On a careful reading of ss.61, 62 and 63 the Court concluded that 'revocable transfer' is used in the sense in which it is understood in the legal world, subject only to the enlargement of scope effected by the deeming provision in s.63 (para 9). It then set out Article 1181, under which gifts between consorts may be freely cancelled at any time by the donors without the wife needing authorisation and with the cancellation required to be expressed, and applied it (paras 10 and 11). In the words reproduced by the source cited on this page: "What is a revocable transfer will depend on various factors including, of course, the operation of law."
It was decided by the High Court on 1993-08-30 and is reported as [1994] 206 ITR 438 (Bom); reference under s.256(1). Binding within that High Court's jurisdiction. Persuasive elsewhere. A High Court decision binds the assessing officer, the Commissioner (Appeals) and the Income Tax Appellate Tribunal within that state, and is persuasive elsewhere. If your assessment is in a different jurisdiction, check whether your own High Court has taken the same view before relying on it. On section 61, section 63, section 62, section 60, section 256(1), the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the department, and it appears in this library for that reason — you need to know what the Assessing Officer will cite against you. The question was answered in the affirmative, in favour of the Revenue and against the assessee (para 13). Article 1181 of the Portuguese Civil Code, being applicable to the gifts in question, showed that gifts by a husband to his wife are revocable gifts (para 11). Section 63 does not have the effect of rendering gifts which are revocable by operation of law or otherwise, irrevocable (para 12). The gifts were therefore revocable gifts within the meaning of s.61 (para 13). It arises in Gifts, Shares & Angel Tax, How Tax Law Is Read and Assessment & Scrutiny matters, on section 61, section 63, section 62, section 60, section 256(1) of the Income Tax Act 1961, and was decided by Dr B.P. Saraf J (author, as printed in the report header). Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. For clients governed by the Portuguese Civil Code in Goa, Daman and Diu, treat inter-spousal gifts as revocable transfers for s.61 unless the position has since changed, and price the clubbing consequence in before the gift is made. Do not argue that s.63 is exhaustive; the Court held that it enlarges and does not restrict the normal meaning of 'revocable transfer'. Read ss.60, 61, 62 and 63 conjointly, as the Court did, before concluding that any of them is out of the way.
Searched for later treatment; none was found. That is not the same as a source affirming it. Two probes were run - a citedby search and a report-citation search on '206 ITR 438' - and both return exactly one document, ITO v Milestone Army Navy Trust (Mumbai Tribunal, 17 April 2018). That is not judicial treatment of this judgment. Reading the order shows the reference to 'The Bombay High Court in the case of CIT vs Mr. & Ms Govind B. C. Ghanekar (1994) 206 ITR 438 (Bom)' sits inside a quoted extract of the CIT(A)'s order - the passage continues in the first person, 'In view of the above discussion, I hold that the appellant trust being a revocable Trust, income is taxable, if any, in the hands of the contributors', and ends by allowing ground of appeal no. 3. The Tribunal then dismissed the Revenue's appeal by following its own coordinate Bench in the assessee's case for an earlier year ('Since, facts and circumstances are identical following the order of the Coordinate Bench... we uphold the order'), not by adopting Ghanekar's reasoning. What was quoted from the judgment is in any event only the text of s.61, not the ratio on revocability arising by operation of law. So nothing applies it, and equally nothing overrules, doubts or confines it; no Supreme Court challenge is traceable. Treat it as an untested single authority on whether a transfer that becomes revocable by operation of law falls within ss.61-63. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
This entry rests on paragraphs 1, 5 and 8 to 13, which were transcribed verbatim; paragraphs 2 to 4, 6 and 7, which set out the facts found below and the Tribunal's reasoning, were not reached, so the factual account here draws in part on a summarised reading of the page and should be checked before it is relied on for anything factual. The equivalent citation is taken from the indiankanoon header line. Whether the relevant provisions of the Portuguese Civil Code as applied in Goa, Daman and Diu remain in the same terms today was not checked. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The question was answered in the affirmative, in favour of the Revenue and against the assessee (para 13). Article 1181 of the Portuguese Civil Code, being applicable to the gifts in question, showed that gifts by a husband to his wife are revocable gifts (para 11). Section 63 does not have the effect of rendering gifts which are revocable by operation of law or otherwise, irrevocable (para 12). The gifts were therefore revocable gifts within the meaning of s.61 (para 13).
TaxSphere, “CIT v Mr and Mrs Govind B.C. Ghanekar”, https://taxnotice.vittsphere.com/caselaw/case/govind-ghanekar-revocable-by-operation-of-law/ (validity last checked 2026-09-08)
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My client's trust deed says that if the purpose fails after twenty years the fund reverts to the settlor. Does that clause alone make the trust revocable, so that the income is taxed in the settlor's hands from day one?
The department has treated my client's trust as revocable, taxed the income in the settlor's hands, and is now attaching the trust's rents under s.226(3) to recover the settlor's arrears for a string of other years. Can it do that?
I did not gift the money — I lent it, interest free, and it is shown as a loan in my books. Does that keep the income out of the clubbing net?
I assigned the dividends on my shares to my wife for her life but kept the shares. Is that dividend still my income?
