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Issues Involved:
1. Whether the document dated February 11, 1969, executed by the assessee is a gift deed or a will. 2. Whether the vested interest created in favor of the assessee's daughters and grandchildren is subject to gift-tax. 3. Interpretation of Section 5(1)(viii) and (x) of the Gift-Tax Act, 1958. 4. Applicability of Section 122 of the Transfer of Property Act. Detailed Analysis: 1. Nature of the Document: Gift Deed or Will The primary issue revolves around the classification of the document dated February 11, 1969. The assessee executed a registered document in favor of his wife, granting her a life estate without any power of alienation, with the properties to be enjoyed by her jointly with him. The document further provided that his daughter and grandchildren would take their respective properties as absolute owners after the lifetime of the assessee and his wife. The Tribunal initially held that the document indicated a present interest in favor of the daughters and grandchildren, thus classifying it as a gift deed. However, the court found that the document did not transfer any present interest to the daughters and grandchildren, and the vesting of interest was intended to take effect only after the lifetime of the assessee and his wife. Therefore, the document was deemed to be a will and not a gift deed. 2. Vested Interest and Gift-Tax The court examined whether the vested interest created in favor of the daughters and grandchildren was taxable under the Gift-Tax Act. It was noted that the life interest created in favor of the wife was exempt under Section 5(1)(viii) of the G.T. Act. The court concluded that the vested interest in favor of the daughters and grandchildren would only take effect after the lifetime of the assessee and his wife, thus not constituting a present gift. Consequently, the document could not be treated as a settlement deed for the purposes of gift-tax. 3. Interpretation of Section 5(1)(viii) and (x) of the G.T. Act Section 5(1)(viii) and (x) of the G.T. Act exempts gifts made to a spouse up to a maximum of Rs. 50,000 and gifts made under a will, respectively. The court clarified that a combined reading of these clauses indicates that gifts to a spouse, whether under a gift deed or a will, are not taxable, with the value restriction applying only to gift deeds. In this case, the life interest granted to the wife was valued at Rs. 57,360, which, according to the GTO's assessment, was completely exempt from gift-tax. 4. Applicability of Section 122 of the Transfer of Property Act The court discussed the applicability of Section 122 of the Transfer of Property Act, which defines a gift as a transfer of property made voluntarily and without consideration. The court observed that the document in question did not create any present interest in favor of the daughters and grandchildren, and there was no acceptance of the gift by them. Therefore, the provisions of Section 122 were not attracted, reinforcing the classification of the document as a will rather than a gift deed. Conclusion: The court concluded that the document dated February 11, 1969, is to be treated as a will concerning the daughters and grandchildren of the assessee. The life interest created in favor of the wife was within the exempt limit prescribed under Section 5(1)(viii) of the G.T. Act. Consequently, the assessee was not liable to gift-tax. The court answered the question in the affirmative and against the Revenue, ordering the Revenue to pay the costs of the assessee, fixed at Rs. 500.
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