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Issues:
1. Validity of the gift made to the donee in the relevant previous year. 2. Interpretation of the compromise memo as constituting a gift. 3. Requirement of registration for a valid gift under the Transfer of Property Act. Analysis: The case involved a reference under s. 26(1) of the G.T. Act, questioning the validity of a gift made to the donee in the relevant previous year. The donor, Paramayee Ammal, claimed to have gifted agricultural lands to her daughter in 1956. However, the Gift-tax Officer (GTO) determined that the donee became entitled to the property only by virtue of a court decree in 1966. The Appellate Tribunal upheld this decision, stating that a valid gift was made through a compromise memo in 1966. The primary issue was whether a gift, as defined by the G.T. Act, was made during the relevant year. The court analyzed the definition of "gift" under the G.T. Act, emphasizing the transfer of property voluntarily and without consideration. The contention that a gift was made in 1956 was dismissed as there was no registered instrument as required by s. 123 of the Transfer of Property Act. The court then examined the alleged gift in 1966 through a compromise memo. It was found that the compromise decree did create a right or interest in the property, but as it was not registered, it did not meet the requirements for a valid gift under the Transfer of Property Act. The court referenced legal principles and cases to support its decision, highlighting the necessity of a registered instrument for a valid gift. The cases cited by the Tribunal were deemed irrelevant as they involved deeds that were executed and delivered, unlike the compromise memo in the present case. Ultimately, the court concluded that there was no valid gift in the year 1966 due to the lack of registration, absolving the assessee of gift-tax liability for the previous year. The questions raised in the reference were answered in the negative, in favor of the assessee.
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