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Interpretation of provisions under sections 2(xii) and 2(xxiv)(a) of the Gift-tax Act regarding the creation of a trust by the deceased karta of a Hindu undivided family for the benefit of family members. Detailed Analysis: The High Court of Delhi was tasked with interpreting the provisions of the Gift-tax Act in a case involving the creation of a trust by the deceased karta of a Hindu undivided family for the benefit of family members. The dispute centered around whether the transfer of properties to the trust constituted a taxable gift under sections 2(xii) and 2(xxiv)(a) of the Act for the assessment year 1966-67. The Gift-tax Officer initially held that the entire amount transferred to the trust was a taxable gift, which was contested by the assessee. The matter progressed through the Appellate Assistant Commissioner and eventually reached the Tribunal. The Tribunal, after examining the trust deed and its legal implications in previous income-tax proceedings, concluded that the creation of the trust fell within the definition of transfer of property under section 2(xxiv)(a) of the Act. It was noted that the transfer was voluntary and without consideration, meeting the criteria of a gift as defined in section 2(xii) of the Act. The Tribunal emphasized that the trust did not lead to a partition of the property among the beneficiaries, further supporting the classification of the transaction as a gift. In the absence of representation from the assessee, the High Court considered the arguments put forth by the Revenue, which highlighted the validity of the trust deed established through income-tax proceedings. The Court concurred with the Tribunal's findings, affirming that the trust deed constituted a valid transfer under sections 2(xii) and 2(xxiv)(a) of the Act. Consequently, the Court ruled in favor of the Revenue, upholding the tax implications associated with the creation of the trust by the deceased karta of the Hindu undivided family. In conclusion, the High Court's judgment clarified the applicability of the Gift-tax Act provisions to the creation of trusts within Hindu undivided families, emphasizing the voluntary and non-partition nature of such transfers in determining their taxability as gifts under the relevant sections of the Act.
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