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Issues:
1. Interpretation of settlement as a gift under the Gift-tax Act, 1958. 2. Determination of settlement as a transfer for adequate consideration under the Gift-tax Act, 1958. 3. Exemption of gift of shares under section 5(1)(xii) of the Gift-tax Act, 1958. Analysis: The court addressed three questions of law raised by the Tribunal. The first two questions dealt with whether a settlement executed by the applicant in favor of his son was a gift under the Gift-tax Act, 1958. The court relied on previous decisions and answered these questions in favor of the Revenue, stating that the settlement was indeed a gift. Moving on to the third question, the court examined a settlement of 1,500 shares of a company for the benefit of the applicant's minor son. The applicant claimed exemption under section 5(1)(xii) of the Gift-tax Act, 1958, for the education of his child. The court analyzed the provision and relevant case law, emphasizing that the settlement was not solely for education but encompassed various purposes. The court highlighted that the term "education" in the Act refers to higher or specialized education, not basic education. The court concluded that the settlement did not qualify for exemption under section 5(1)(xii) as it did not specifically allocate any portion for the child's education, ultimately ruling in favor of the Revenue. The court's decision was based on the interpretation of the Gift-tax Act, 1958, and the specific provisions regarding gifts and exemptions. The court emphasized the need for settlements to meet the criteria outlined in the Act to qualify for exemptions, particularly in cases involving gifts for education. The court clarified that the exemption under section 5(1)(xii) applies to gifts specifically designated for higher education, and not for general expenses like food, clothing, or basic education. By analyzing the facts and legal principles, the court determined that the settlement in question did not meet the requirements for exemption under the Act, leading to a ruling in favor of the Revenue. The judgment underscores the importance of precise legal interpretation and adherence to statutory provisions when assessing tax implications related to gifts and settlements under the Gift-tax Act, 1958.
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