Law: Gift Tax Act, 1958

Section: 2,2(xxiv)

Indian Gift Tax Act, 1958-Section 2(xxiv)-Gift-Tax-Document styled and registered as settlement Property to devolve on sons on death of during life time and thereafter in their children absolutely -Nature of transaction-Whether testamentary-Held yes-Whether effects transfer of property-Held no-Whether constitutes n got attracting the provisions of the Gift Tax Act--Held no Distinction between gift "and will" explained A document styled as a settlement deed provided that (i) the settlors were to continue to enjoy the two properties in question during their lifetime and will have no power to alienate or otherwise dispose of the property in any manner such as by way of gift, exchange, mortgage, etc. ; (ii) after the death of both the settlors one of the sons should enjoy one of the properties during his lifetime while another so should enjoy the other property during his lifetime ; (iii) both the sons would not have any power of alienation by Way Of gift, exchange, mortgage, etc, and after their lifetime their heirs would take an i enjoy the properties as full owners absolutely ; (iv) the settlors should maintain the respective properties in good repair and guy the taxes and other dues of a public nature; and (v) the settlers shall have no right to revoke this deed of settlement. The Tribunal held that the document contained a testamentary disposition and did not constitute gift and hence the provisions of the Gift-tax Act, 1958, were not applicable to the transaction in question. In the reference to the High Court at the instance of the department Held, (I) that the nomenclature given by the parties to the transaction in question is not decisive ; (2) there being no provision in the document for transferring any interest in the immovable properties dealt with thereunder in favour of any one of the parties in present. Notwithstanding the fact that it was styled, stamped and registered as a settlement and the settlors had provided that the document was irrevocable, the dispositions contained in the document were only testamentary in character and not inter vivos and. therefore, cannot constitute a gift attracting the provisions of the Gift-tax Act, 1958.…

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