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Interpretation of section 64 of the Income-tax Act regarding assessment of income from property, determination of whether a release deed constitutes a gift under the Gift-tax Act, consideration of relevant provisions of the Gift-tax Act in relation to the release deed. Analysis: The case involved a reference under section 256(1) of the Income-tax Act, 1961, regarding the assessment of income from a property received as a gift by the assessee. The deed of gift entitled the assessee to enjoy the property during her lifetime, after which it would devolve on her children. The Income-tax Officer assessed the income from the property in the hands of the assessee under section 64 of the Income-tax Act, arguing that the assessee had no right to gift away the property during her lifetime due to specific terms in the gift deed. The Appellate Assistant Commissioner disagreed, holding that the release deed executed by the assessee did not constitute a gift of her interest in the property, thereby directing the deletion of the income from the assessee's taxable income. The Revenue appealed to the Income-tax Appellate Tribunal, which determined that there was no transfer of interest in the property by the assessee through the release deed, as it was a unilateral act. The Tribunal also found that the income from the property could not be included in the assessee's individual assessment since she was no longer enjoying it post-release. Citing the decision of the Gujarat High Court, the Tribunal concluded that section 64 of the Income-tax Act was not applicable in this scenario. The High Court analyzed the terms of the release deed and considered the definition of 'gift' under the Gift-tax Act, specifically section 4(1)(c), which deems certain releases as gifts unless proven to be bona fide. Since the Gift-tax Officer had not found the release deed to be non-bona fide, section 4(1)(c) did not apply, and the release deed could not be considered a gift deed. The Court also discussed section 4(1)(e) of the Gift-tax Act, which was not applicable to the case due to the assessment year in question being 1980-81. Ultimately, the High Court ruled in favor of the assessee, holding that the release deed did not amount to a gift under the provisions of the Gift-tax Act. The Court's decision was based on the lack of evidence to suggest that the release was not made bona fide, as required by the relevant provisions of the Gift-tax Act. Therefore, the income from the property could not be assessed in the assessee's hands under section 64 of the Income-tax Act.
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