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Issues: Whether the release deed executed by the assessee, by which he gave up his life interest in specified lands in favour of selected remaindermen, amounted to a gift under the Gift-tax Act, 1958.
Analysis: The assessee held only a life interest under the testamentary disposition, and that interest was capable of transfer. The release deed did not operate as a general surrender in favour of the entire body of remaindermen so as to result in a true acceleration of their interests. Instead, it conferred immediate benefit only on the named releasees and enabled them to enjoy the income from specified properties during the assessee's lifetime. On that footing, the transaction was not a mere effacement of the life estate holder but a grant of interest in property in favour of the named beneficiaries, bringing it within the definition of transfer of property under the Act and, consequently, within the definition of gift.
Conclusion: The release deed constituted a gift and was rightly brought to tax. The answer to the referred question was therefore in the affirmative and against the assessee.
Ratio Decidendi: A selective surrender of a life interest in favour of chosen remaindermen, which confers an immediate beneficial interest on them during the life tenant's lifetime, is a taxable transfer and not a mere acceleration of the vested remainder of the entire class of remaindermen.
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