Gift-tax rebate on bona fide advance payment survives a minor valuation shortfall after assessment.

Rebate under section 18 of the Gift-tax Act was available where advance gift-tax was paid on a bona fide valuation within time, even though assessment later disclosed a small shortfall because the assessing authority adopted a higher valuation. The provision was intended to encourage prompt advance payment and was not to be defeated by a marginal revaluation at assessment. The gifts also had to be aggregated under the statutory scheme, and exemption was not separately available for each item of gift.

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Issues: Whether rebate under section 18 of the Gift-tax Act, 1958 is available where the assessee paid advance gift-tax on the basis of a bona fide valuation but the assessing officer found a small shortfall on account of a higher valuation adopted at assessment.

Analysis: Section 18 granted credit for 10% of the amount of tax paid in advance if the tax due on the gift was paid within the prescribed time. The provision was intended to encourage prompt advance payment of gift-tax and was not designed to deny the rebate merely because the assessing officer later adopted a higher valuation, especially where the assessee had acted on a bona fide valuation. A marginal shortfall arising from the officer's revaluation could not be used to defeat the statutory benefit. The gifts had also to be aggregated for applying the statutory scheme, and the exemption was not separately available for each item of gift.

Conclusion: The assessee was entitled to the rebate under section 18 notwithstanding the shortfall caused by the difference in valuation, and the question was answered in the affirmative in favour of the assessee.

Ratio Decidendi: A statutory rebate for advance payment of gift-tax cannot be denied merely because assessment ultimately discloses a minor shortfall caused by the assessing authority's higher valuation, provided the assessee paid on the basis of a bona fide valuation within the statutory time.

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