Gift-tax treatment of a registered settlement deed cannot be altered by a later agreement after the transfer is complete.

A registered settlement deed that contained no annuity clause was treated, on its own terms, as an outright gift under section 4(1)(a) of the Gift-tax Act, 1958. A contemporaneous or later agreement could not be read with the completed deed to change the nature of the transfer or its valuation for gift-tax purposes, and the Act and Rules did not permit the revenue to rely on such an agreement to dilute the legal effect of the registered instrument. The Tribunal was therefore wrong to direct a fresh determination on that basis, and the issue was answered against the assessee and in favour of the Revenue.

---

---

Issues: Whether a registered settlement deed, devoid of an annuity clause after registration, was an outright gift within the meaning of the Gift-tax Act, 1958, and whether a contemporaneous or subsequent agreement could be read with the deed to alter its nature and valuation.

Analysis: The settlement deed as registered contained no stipulation for payment of annuity and, on its own terms, amounted to a gift under section 4(1)(a) of the Gift-tax Act, 1958. A later agreement, even if genuine and enforceable, could not be used by the revenue authorities to whittle down the completed gift or to determine the character and valuation of the earlier transaction. The Act and the Rules did not permit reliance on such an agreement to modify the legal effect of the registered deed.

Conclusion: The agreement could not be read with the registered settlement deed for the purposes of the gift-tax assessment, and the Tribunal was in directing a fresh determination on that basis; the answer was against the assessee and in favour of the Revenue.

---