Law:

Section:

Section 6, read with section 4 of the Gift-tax Act, 1958 - Valuation of gifts - Assessment year 1964-65 - Assessee was an executrix of will of her husband-Under will she had been given life interest in business with all its assets and liabilities - Assessee transferred without consideration business to her son, one of legatees - Whether transfer amounted to gift of life interest - Held, yes - Whether, therefore, life interest alone had to be valued for assessment of tax and not entire value of properties itself - Held, yes FACTS The assessee transferred without any consideration a stationery business with all its assets and liabilities including the goodwill to her son. The GTO estimated the value of the business and the value of goodwill. He assessed to gift-tax certain amount The plea of the assessee was that under the terms of the gift, what was transferred to the donee, was only the property bequeathed to him by her late husband, to whom the business originally belonged and that the assessee was acting only as an executrix to under the will, when she executed the document in favour of her son and since the assessee was not the owner of the property comprised in the gift deed, there was no valid transfer by way of gift and no gift-tax was attracted. The contention was rejected by the GTO, which view was confirmed by the Appellate Assistant Commissioner, who took the view that the donor had absolute rights in the property gifted. In the second appeal, the Tribunal took the view that the assessee was not an executrix under the will, but had a life-interest in the properties comprised therein and what was conveyed under the gift deed, in favour of son by the assessee was only the donor's life-interest. On reference : HELD The view of the Tribunal that the assessee was not an exexutrix under the will was right. The disposition in the will of assessee's deceased husband showed that during the lifetime of the assessee, she was given a beneficial interest in the properties, and it was only after her death that the donee, and the other sons of the testator were entitled to have the properties given to them in accordance with the terms of the will. The right to take…

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