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Issues: Whether the release deed by which the assessee surrendered her life interest in trust income amounted to a taxable gift under the Gift-tax Act, 1958, either as a transfer of property or as a deemed gift.
Analysis: The release deed showed that the assessee voluntarily relinquished her life interest in the specified trust property, with the result that the remaindermen's interest under the original settlement was accelerated and the trustees were discharged from their obligation to pay income to the assessee. Such a transaction was not a transfer by one person to another within the meaning of the definition of gift, because the operative act was a unilateral release and not a bilateral or multilateral transfer. The provision dealing with transactions intended to diminish one person's property and increase another's value also required a transaction entered into between parties, which was absent here. As regards deemed gift, the record did not show any adverse finding by the Gift-tax Officer that the release was not bona fide, and the appellate finding was that the release was bona fide.
Conclusion: The release deed did not constitute a taxable gift under the charging provisions of the Gift-tax Act, 1958, and was not assessable to gift-tax.
Ratio Decidendi: A unilateral surrender of a life interest which merely accelerates the vested remainder under an existing trust is not a gift unless it amounts to a transfer between two persons or falls within the statutory deeming provision on a finding that the release was not bona fide.
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