Gift-tax exemption for movable property in Jammu and Kashmir upheld where the donor was resident but not ordinarily resident.

Movable property gifted in Jammu and Kashmir fell within the exemption under section 5(1)(ii) of the Gift-tax Act, 1958, because the Act did not extend to that territory and the gift was made and accepted there. The Tribunal's findings that the property was situate in Jammu and Kashmir and that the donor was resident but not ordinarily resident were supported by the record, bringing the transaction within the statutory exception. Accordingly, the gift was not liable to gift tax under the Act.

---

---

Issues: Whether the gift of Rs. 1 lakh made in Jammu and Kashmir was exempt from gift tax under section 5(1)(ii) of the Gift-tax Act, 1958.

Analysis: The Act extended to the whole of India except the State of Jammu and Kashmir. Section 5(1)(ii) exempted gifts of movable property situate outside the territories to which the Act extended, subject to the stated exception for a citizen of India ordinarily resident in those territories. The Tribunal's factual findings that the gift was made and accepted in Jammu and Kashmir, that the property was movable property situate there, and that the donor was resident but not ordinarily resident were supported by the record and remained uncontroverted. Those conditions brought the case within the exemption.

Conclusion: The gift was not taxable under the Gift-tax Act, 1958, and the exemption under section 5(1)(ii) applied in favour of the assessee.

Ratio Decidendi: Where movable property is gifted in Jammu and Kashmir and the donor is resident but not ordinarily resident, the gift falls within the exemption in section 5(1)(ii) of the Gift-tax Act, 1958.

---