Law:

Section:

Section 5(3) , read with section 5(1)(viii) of the Gift-tax Act, 1958 - Deemed Gift - Chargeable as - Assessment year 1964-65 - Gift in question was by a deed dated 7-4-1964, executed by wife in favour of her husband - Earlier she had obtained this property from her husband by a gift deed dated 26-4-1957 - Gift deed dated 26-4-1957 was exempted from tax under section 5(1)(viii) - Whether when there was a gift by spouse and said gift was out of any gifts received by that spouse as falling within clause (viii), sub-section (3) of section 5 was attracted notwithstanding provision in sub-section (1) or (2) - Held, yes - Whether, therefore, Tribunal was right in holding that section 5(3) applied to gift in question and said gift was liable to tax - Held, yes FACTS The gift in question was by a deed dated 7-4-1964, executed by the wife in favour of her husband. Earlier, she had obtained this property from her husband by a deed of gift dated 26-4-1957. This gift deed dated 26-4-1957, was exempted from tax under section 5(1)(viii). The Tribunal was of the view that section 5(3) applied to the gift under consideration and that the gift was liable to tax. On reference : HELD The Act as is evident from the provision in section 5(1)(viii ), takes in not only gifts that had taken place during the particular period of one year but for longer periods of several years. On a reading of sub-section (3) of section 5 the questions that had to be answered were (1) was there a gift by a spouse ? and (2) was that gift by the spouse out of any gifts received by that spouse as fall within clause (viii) ? If these two questions were answered in the affirmative sub-section (3) was attracted notwithstanding the provisions in sub-section (1) or (2). So far the gift in question, the one dated 7-4-1964, exemption under clause (viii) of sub-section (1) of section 5 was not available. Therefore, the Tribunal was right in holding that section 5(3) applied to the gift under consideration and that the gift was liable to tax. Note: Case was decided against assessee. CASE REFERRED TO Abdulsalam Rowther v. State of Kerala [1960] K.L.J. 1505 (Ker.). JUDGMENT Govindan Nair, J.-The question referred to…

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