Law:

Section:

Section 2(xii) of the Gift-tax Act, 1958 - Gift - Assessment year 1997-98 - One of assessee's daughters filed a suit for partition against assessee claiming her share in property in question - In said suit, a compromise decree came to be passed whereby assessee had relinquished her right in said property to extent of half share - Assessing Officer held that half share of assessee's house property transferred on strength of compromise decree would amount to gift and assessee was liable to pay gift-tax thereon - Whether in circumstances under which half of share fell to daughter of assessee could only be said to be a family arrangement, and not a device adopted by assessee so as to avoid payment of gift-tax and, therefore, no gift-tax could be levied on assessee - Held, yes FACTS The assessee purchased property in question from her husband by a registered sale deed. Subsequently, the manager of the family of the assessee, i.e., 'P' died intestate and, therefore, all family members had a right to the property left behind by him. Thereafter, 'V', one of the assessee's daughters filed a suit for partition against the assessee claiming her share in the property in question contending that all the children of 'P', his wife and parties to the suit had effected a partition of all the joint family properties among themselves under an oral partition and at the time of the partition, property in question had been shown as jointly allotted to the share of the plaintiff and the defendant (the assessee) and each one of them had got an undivided half share thereon. In the said suit, a compromise decree came to be passed by the Court whereby the assessee had relinquished her right in the said property to the extent of half share. In the said compromise, all other joint owners of the property had also given their no objections in favour of 'V'. The Assessing Officer held that half share of the assessee's house property transferred on the strength of the compromise decree would amount to gift and, therefore, the assessee was liable to pay gift-tax. On appeal, the Commissioner (Appeals) upheld the order of the Assessing Officer. On second appeal, the Tribunal deleted the addition…

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