Gift-tax exemption turns on where movable property is situate when the gift is completed, and on valid transfer and acceptance requirements.

For exemption under section 5(1)(ii)(a) of the Gift-tax Act, the decisive factor is where movable property is situate when the gift is validly completed. A gift is complete only on a valid transfer, and where the Transfer of Property Act applies, acceptance by the donee is necessary. On one set of facts, bank drafts remitted from abroad were treated as situate in India because there was no proof of acceptance outside India or of agency by the remitting machinery, so the exemption was denied. On another, foreign fixed deposits were treated as outside India when the donor's instructions in England completed the transfer, so the exemption applied.

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Issues: (i) Whether gifts remitted from abroad by bank draft to donees in India were exempt under section 5(1)(ii)(a) of the Gift-tax Act, 1958, in the absence of proof that the drafts were accepted outside India or that the post office acted as the donees' agent; (ii) Whether fixed deposits standing in a foreign bank, transferred on maturity to daughters in India pursuant to instructions issued abroad, were exempt under section 5(1)(ii)(a) of the Gift-tax Act, 1958.

Issue (i): Whether gifts remitted from abroad by bank draft to donees in India were exempt under section 5(1)(ii)(a) of the Gift-tax Act, 1958, in the absence of proof that the drafts were accepted outside India or that the post office acted as the donees' agent.

Analysis: The exemption for movable property depends on the situs of the property when the gift is completed. A gift under the Act is not complete until there is a valid transfer, and where the transaction is governed by the Transfer of Property Act, acceptance by the donee is essential. On the facts found, there was no material to show that the drafts were accepted outside India or that the remitting machinery acted as the donees' agent. The burden to establish exemption remained on the assessee and was not discharged. Accordingly, the drafts were treated as situate in India when the gift became complete.

Conclusion: The gifts were not exempt and were taxable; the answer was in favour of the Revenue.

Issue (ii): Whether fixed deposits standing in a foreign bank, transferred on maturity to daughters in India pursuant to instructions issued abroad, were exempt under section 5(1)(ii)(a) of the Gift-tax Act, 1958.

Analysis: The Tribunal had found that the property in the fixed deposits passed when the donor issued instructions in England to the foreign bank, and the Revenue could not dislodge that finding. On that factual basis, the property was treated as outside India at the relevant time. The gifts were also largely in favour of minors, strengthening the conclusion that the transfer was completed abroad within the statutory exemption.

Conclusion: The exemption was available and the answer was against the Revenue.

Final Conclusion: The references were answered differently on the two sets of facts: the draft remittances were held taxable, while the foreign fixed-deposit transfers were held exempt under the statutory exception.

Ratio Decidendi: For exemption under section 5(1)(ii)(a), the decisive factor is where the movable property is situate when the gift is validly completed, and a gift is complete only upon a valid transfer with necessary acceptance where required by law.

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