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Issues:
Interpretation of section 4(1)(a) of the Gift-tax Act, 1958 regarding the deduction of gift-tax payable by the donee as consideration. Analysis: The case involved a reference under section 26(1) of the Gift-tax Act, 1958, where the question was whether the gift-tax payable by the donee should be deducted as consideration under section 4(1)(a) of the Act. The settlement deed involved the transfer of a hotel complex with conditions for the donee to pay a sum to another individual and the gift-tax. The Gift-tax Officer rejected the deduction claim, but the Tribunal allowed it, leading to the reference. The Tribunal held that gift-tax payable by the donee should be deducted as consideration under section 4(1)(a) of the Act. The Tribunal's interpretation was challenged, arguing that the Act does not provide for such deductions. The court examined the principles of construction of statutes and the scheme of the Act. It noted that section 4(1)(a) deems transfers without adequate consideration as gifts, ignoring stated money consideration and assessing gift-tax on the difference between market value and consideration. The court emphasized that the Act does not treat gift-tax payable by parties as consideration or part of the gift. It criticized the Tribunal's interpretation as unwarranted and erroneous, stating that gift-tax by the donee cannot be considered as consideration. The court rejected the Tribunal's reliance on principles of proof and burden of proof in interpreting the Act, emphasizing that such principles are not relevant in taxing statutes. Ultimately, the court answered the question in the negative, favoring the Revenue and against the assessee. It declined to address the assessee's contention regarding property valuation, directing the assessee to pursue remedies before the Tribunal. The parties were directed to bear their own costs, concluding the judgment.
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