Sham transaction doctrine barred gift-tax on transfers under a fake lottery-sharing agreement, with no referable question of law.

A transfer of lottery winnings to the assessee's sons was treated as outside gift-tax because the underlying agreement was found to be a sham. Once that foundation was rejected, the payments under it could not be split and treated as genuine for another purpose; transactions based on a sham document must be ignored in their entirety. On that basis, the finding that no gift was involved was one of fact on the record, and no referable question of law arose from the Tribunal's order.

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Issues: Whether the Tribunal was justified in treating the transfer of money to the assessee's sons as outside the scope of gift-tax on the footing that the payment flowed from a sham agreement, and whether any referable question of law arose from the Tribunal's order.

Analysis: The agreement to share the lottery winnings was found to be a sham. Once that foundation was rejected, the payments made under it could not be isolated and treated as genuine for a different purpose. Transactions flowing from a sham document are to be ignored for all purposes, and the Revenue could not accept the agreement as sham for one purpose while relying on its consequences for another. On that footing, the Tribunal's conclusion that no gift was involved was a factual conclusion based on the record, not a legal question requiring reference.

Conclusion: The Tribunal was right in holding that the transfer did not attract gift-tax, and no referable question of law arose.

Ratio Decidendi: A transaction founded on a sham document must be ignored in its entirety, and a finding based on such treatment is ordinarily one of fact, giving rise to no referable question of law.

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