Gift-tax applies to partner's land transfer where intent and substance show a taxable gift despite unequal valuation effect.

A partner's transfer of land to a firm was treated as a taxable gift under the Gift-tax Act because the substance of the transaction and the donor's intent controlled the characterisation. The Court held that a transfer made to diminish the value of one person's property and increase the value of another's property can constitute a gift, even if the corresponding decrease and increase are not mathematically equal. On the facts, the Tribunal's valuation was upheld and the claimed exemption was rejected, leaving the transfer liable to gift-tax.

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Issues: Whether the transfer of land by a partner to the firm amounted to a gift attracting gift-tax, and whether the assessee was entitled to exemption under the Gift-tax Act.

Analysis: The transfer fell within the statutory definition of transfer of property and gift under the Gift-tax Act. The Court applied the principle that, in a partnership setting, the substance of the transaction and the intent behind it are material. It held that a transaction entered into with the object of diminishing the value of the donor's property and increasing the value of another's property can be treated as a gift, and that the effect of the transfer need not be mathematically equal to the corresponding increase in the recipient's estate. On the facts, the valuation adopted by the Tribunal was found to be justified, and the claimed exemption was not accepted.

Conclusion: The transfer was liable to gift-tax and the assessee was not entitled to relief.

Ratio Decidendi: A transfer made with the intent to diminish the value of one person's property and increase the value of another's property is taxable as a gift, even if the resulting diminution and increase are not equal in amount.

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