Voluntary transfer without consideration treated as a gift, despite later revocability, under the Gift-tax Act.

Transfer of jewellery by the assessee was treated as a gift under the Gift-tax Act because the transfer was made voluntarily, without consideration, and divested the transferor of all rights in the property for the specified period. The transferee obtained full ownership and enjoyment during that period, and the fact that the transfer was revocable after 74 months did not change its character while it remained irrevocable. The transaction therefore fell within the statutory concept of gift and was chargeable to gift tax, with the issue decided against the assessee and in favour of the Revenue.

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Issues: Whether the transfer of jewellery by the assessee to the company constituted a gift within the meaning of the Gift-tax Act.

Analysis: The expression "gift" covers a transfer by one person to another of existing movable or immovable property made voluntarily and without consideration in money or money's worth. The definition of "transfer of property" is of wide amplitude and includes disposition, conveyance, assignment, settlement, delivery and other alienation of property, as well as transactions intended to diminish the transferor's property and increase the property of another. On the terms of the transfer letter, the assessee divested herself of all rights in the jewellery for a specified period, while the transferee obtained full ownership and enjoyment during that period. The fact that the transfer was revocable after 74 months did not alter the character of the transaction during the period of irrevocability, and the transfer remained one made without consideration.

Conclusion: The transfer amounted to a gift and was chargeable under the Gift-tax Act. The answer was therefore against the assessee and in favour of the Revenue.

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