Family arrangement recognising an antecedent claim was treated as supported by consideration and not a taxable gift.

A bona fide family arrangement recognising an alleged antecedent claim to a share in inherited property is supported by consideration and is not a gratuitous transfer. On the Tribunal's finding, the allotment of property to the assessee's son under the 1959 deed was made to adjust pre-existing claims and maintain family peace, so it did not constitute a taxable gift under the Gift-tax Act, 1958. The allotment was therefore outside the charging provision and no gift-tax liability arose.

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Issues: Whether the allotment of property to the assessee's son under the deed dated 12 November 1959 constituted a taxable gift under the Gift-tax Act, 1958.

Analysis: The parties entered into the arrangement under a bona fide belief that the son had an antecedent claim to a half share in the properties left by the deceased. A family arrangement rests on recognition and adjustment of pre-existing claims and is intended to avoid future disputes and preserve peace and harmony. On the Tribunal's finding, the allotment to the son was made on that footing and was supported by consideration, so it was not a gratuitous transfer.

Conclusion: The transfer was not a taxable gift and the question was answered in the affirmative against the revenue.

Final Conclusion: The assessee was not liable to gift-tax on the allotment made under the family arrangement, as the transfer was treated as one for consideration and outside the charging provision.

Ratio Decidendi: A bona fide family arrangement recognising a perceived antecedent claim and effecting an allotment in settlement of that claim is supported by consideration and does not amount to a taxable gift.

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