Bona fide family arrangement excluded gift-tax on a compromise transfer of property share to a daughter.

A transfer of half share in property to a daughter under a compromise decree in a family dispute was treated as a bona fide family arrangement, because it settled the family claim and was consented to by the co-owners. On those facts, the transaction was not regarded as a device to evade gift-tax and was held not to attract tax under the Gift-tax Act. The Tribunal's view that no taxable gift arose was accepted as correct.

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Issues: Whether the transfer of half share in the property to the assessee's daughter pursuant to a compromise decree in a family dispute amounted to a taxable gift under the Gift-tax Act.

Analysis: The transfer arose out of a family dispute between mother and daughter and was brought about through a compromise decree in civil proceedings. The surrounding circumstances showed that the arrangement was entered into to settle the family claim and that the co-owners had also consented to the compromise. On these facts, the transaction was treated as a bona fide family arrangement and not as a device adopted to evade gift-tax. The Tribunal's view that the transfer did not attract gift-tax was accepted as correct.

Conclusion: The transfer did not constitute a taxable gift and the question was answered in favour of the assessee.

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