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Whether the gift of Rs.1 lakh was taxable under the Gift-tax Act, 1958? Analysis: The case involved a dispute regarding the taxability of a gift of Rs.1 lakh under the Gift-tax Act, 1958. The assessee claimed exemption under section 5(1)(ii) of the Act, arguing that as the gift took place in Jammu and Kashmir, it fell outside the Act's scope. The Gift-tax Officer and the Appellate Assistant Commissioner held that the exemption was not applicable as the amount was transferred from Ahmedabad to Srinagar. The Tribunal, after considering the facts, found that the gift was movable property in Jammu and Kashmir, made and accepted in the state, and both donor and donee were physically present in Srinagar during the transaction. The Tribunal analyzed the relevant provisions of the Act and found that the conditions for exemption under section 5(1)(ii) were fulfilled. The Act did not extend to Jammu and Kashmir, and the provision stated that a gift of movable property outside India, except Jammu and Kashmir, would not be charged to gift-tax under the Act. The Tribunal noted that the donor was a resident but not ordinarily resident, as per the assessment order, and all other criteria under section 5(1)(ii) were satisfied. The Court agreed with the Tribunal's findings, stating that all conditions for claiming exemption under section 5(1)(ii) were fulfilled. Therefore, the gift of Rs.1 lakh was held not taxable under the provisions of the Act. The Court answered the question in favor of the assessee and against the Revenue. The reference was disposed of with no order as to costs.
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