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Interpretation of settlement deed as a gift under the Gift-tax Act, 1958. Analysis: The case involved a reference under section 26(1) of the Gift-tax Act, 1958, regarding the interpretation of a settlement deed dated September 21, 1972. The settlement deed involved the transfer of immovable properties by the assessee and her husband to their son and daughter. Initially, the deed included a condition for the payment of annuity to the assessee and her husband, but this clause was later deleted during registration. Subsequently, an agreement was executed the next day to undertake the payment of annuity as originally stipulated. The Gift-tax Officer assessed the transaction as a gift and brought it under the purview of the Act. The Appellate Assistant Commissioner upheld this decision, leading to an appeal before the Tribunal. The key question before the court was whether the settlement deed constituted an outright gift of immovable property or if it should be considered in conjunction with the agreement for the payment of annuity. The Tribunal had allowed the appeal and directed the Appellate Assistant Commissioner to treat the deed and the agreement as one document for reevaluation. The Revenue contended that the Tribunal erred in considering the agreement in determining the nature of the transaction, emphasizing that such reliance was not permissible under the Act. The court analyzed the settlement deed and the subsequent agreement, noting that the registered deed did not include a provision for the payment of annuity by the son and daughter. The court opined that the settlement deed, as executed and registered, constituted a gift within the meaning of the Act. The court emphasized that any agreement entered into after the gift transaction could not be relied upon to alter the nature or valuation of the initial gift for tax purposes. Relying on precedents, the court highlighted that the Act did not permit the consideration of subsequent agreements to modify the terms of a gift. Ultimately, the court held that the Tribunal erred in considering the agreement and directing a reassessment based on both the deed and the agreement. The court ruled in favor of the Revenue, concluding that the settlement deed should be treated as a gift under the Act without considering the subsequent agreement. The court directed the parties to bear their own costs in the case, bringing a conclusion to the legal proceedings.
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