Trust settlement of equity shares treated as taxable gift under the Gift-tax Act despite maintenance obligation claim.

A settlement in trust of 150 equity shares was treated as a taxable gift under the Gift-tax Act, 1958. The Bombay HC applied its earlier decisions on substantially similar facts and held that the asserted connection with the assessee's maintenance obligation did not change the legal character of the transfer for gift-tax purposes. On that basis, the reference under section 26(1) was answered against the assessee and in favour of the Revenue.

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Issues: Whether the settlement in trust of 150 equity shares amounted to a taxable gift under the Gift-tax Act, 1958.

Analysis: The answer was governed by the earlier decisions of the same court on substantially similar facts. The settlement was examined as a question of law, and the existence of an asserted element referable to the assessee's maintenance obligation did not alter the legal character of the transfer for the purpose of gift-tax. The reference was made under section 26(1) of the Gift-tax Act, 1958.

Conclusion: The settlement in trust of the 150 equity shares amounted to a gift taxable under the Gift-tax Act, 1958, and the answer was against the assessee and in favour of the Revenue.

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