9911796707
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Issues Involved:
1. Whether the exercise of the power of appointment by the assessee resulted in a taxable gift under the Gift-tax Act, 1958. 2. Whether the release or surrender of the assessee's life interest resulted in a taxable gift under the Gift-tax Act, 1958. Issue-wise Detailed Analysis: 1. Exercise of Power of Appointment: The court examined whether the execution of the deed of poll by the assessee, which exercised the power of appointment vested in her under the trust deed, resulted in a taxable gift. The trust deed provided a special power of appointment, allowing the assessee to appoint the trust property only in favor of her children or remoter issue. The court noted that the term "power of appointment" generally refers to the ability to determine the disposition of property not owned by the donee, and such powers are classified as either general or special. The court concluded that the power conferred by the trust deed was a special power of appointment because it could only be exercised in favor of a specified class (the assessee's children or remoter issue). Clause (c) of section 2(xxiv) of the Gift-tax Act, which defines "transfer of property," was interpreted to apply only to the exercise of general powers of appointment, which can be exercised in favor of any person other than the donee. Since the power in question was a special power, its exercise did not constitute a "transfer of property" under section 2(xxiv)(c) and, therefore, did not result in a taxable gift. The court answered the first question in the negative. 2. Release or Surrender of Life Interest: The court analyzed whether the deed of release or surrender executed by the assessee, which relinquished her life interest in the trust property, amounted to a taxable gift. The deed was unilaterally executed by the assessee and was not a bilateral or multilateral act involving her daughter, Mrs. Elizabeth Anne Guhl. The court referred to the definition of "transfer of property" in section 2(xxiv) and concluded that the term "disposition" within this context requires a bilateral or multilateral act. A unilateral act, such as the deed of release in question, does not qualify as a "disposition" or "transaction" under section 2(xxiv). Therefore, the release or surrender of the life interest did not constitute a "transfer of property" and could not be considered a "gift" under section 2(xii). The court also addressed the contention that the deed of release could be deemed a gift under section 4(1)(c) of the Act, which includes releases or surrenders not found to be bona fide. The Tribunal had found the deed of release to be bona fide, and such a finding of fact could not be challenged in the reference. Consequently, the court answered the second question in the negative, affirming that the release or surrender did not result in a taxable gift. Conclusion: The court held that neither the exercise of the power of appointment nor the release or surrender of the life interest by the assessee resulted in taxable gifts under the Gift-tax Act, 1958. The revenue was directed to pay the costs of the assessee.
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