Reciprocal obligations under a settlement showed real consideration, so the property transfer was not taxable as a gift.

A settlement recorded before an arbitrator showed reciprocal obligations: one group relinquished and waived rights in certain properties and in the balance price receivable by the company, while the company assigned its rights in the properties covered by the settlement. On that basis, the arrangement disclosed real consideration flowing between the parties, and the Tribunal's view that consideration was wholly absent could not stand. The transaction was therefore not liable to be treated as a gift merely because of alleged absence of consideration, and the issue was decided in favour of the assessee and against the Revenue.

---

---

Issues: Whether the Tribunal was right in holding that the transaction involved no consideration and was therefore exigible to gift-tax.

Analysis: The settlement recorded before the arbitrator showed that the Kantilal group relinquished and waived its rights in certain properties and in the balance price receivable by the company, and in return the company assigned its rights in the properties described in the settlement. The arrangement therefore disclosed reciprocal obligations and a real consideration flowing from the relinquishment of rights by one group against the transfer of properties by the company. The Tribunal's summary view that consideration was totally lacking could not stand in the face of the settlement terms.

Conclusion: The issue was answered in favour of the assessee and against the Revenue. The transaction could not be treated as a gift on the ground that it lacked consideration.

---