2006 (2) TMI 116 - HC - Income Tax

Gift Tax Act 1958 - Whether was justified in holding and had valid materials to hold that the gift of jewellery on August 19 1974 made by the late C.V.CT. Thevani Achi was made in contemplation of death and hence exempt under section 5(1)(xi) of the Gift-tax Act? - Assessee had established the case. The medical certificate also proves the question beyond the realm of doubt and controversy. The findings recorded by the Tribunal are therefore based on the material and evidence on record and do not suffer from any legal infirmity. - In view of the foregoing conclusions we hold that the gift was a gift in contemplation of the death and not taxable. Hence we answer the questions in favour of the assessee against the Revenue

Summary

Issues:
1. Whether the gift of jewellery made by the late individual was exempt under section 5(1)(xi) of the Gift-tax Act?

Detailed Analysis:
The case involved a gift of jewellery made on August 19, 1974, by the late individual. The individual, aged 90, was ill and passed away on August 28, 1974, shortly after making the gift. The key to the iron safe containing the jewellery was handed over to the child on the same day as a symbol of completion of the gift. The question was whether this gift qualified as being made in contemplation of death under section 5(1)(xi) of the Gift-tax Act.

The Commissioner of Gift-tax (Appeals) initially rejected the claim that it was a gift in contemplation of death, emphasizing that the motive behind the gift was the happiness derived from seeing the great-grandchild, born after a long period of ten years. However, the Income-tax Appellate Tribunal later ruled that the gift was indeed made in contemplation of death and was not taxable.

The Tribunal considered the medical certificate provided by the doctor who had been attending to the individual. The certificate indicated the individual's deteriorating health condition and the doctor's opinion that she may not survive for more than a month. The Tribunal accepted this additional evidence along with the circumstances surrounding the gift to conclude that the gift was made in contemplation of death.

Ultimately, the Tribunal found that the gift met the criteria of being made in contemplation of death, especially considering the individual's age, health condition, and the timing of her passing. The Tribunal's decision was based on the evidence and did not have any legal flaws. Consequently, the Tribunal ruled in favor of the assessee, determining that the gift of jewellery was exempt under section 5(1)(xi) of the Gift-tax Act.

In conclusion, the Tribunal dismissed the tax case, holding that the gift of jewellery made by the late individual on August 19, 1974, was indeed a gift in contemplation of death and therefore not taxable. The ruling was in favor of the assessee, and no costs were awarded in the case.