Ambiguous fiscal definition of "person" under gift-tax law led to a construction favouring the assessee.

The charge to gift-tax on a firm transferring flats to retiring partners turned on whether a firm fell within the expression "person" in section 2(xviii) of the Gift-tax Act, 1958. Because the statutory definition was treated as non-exhaustive and there was conflicting judicial opinion on the firm's separate assessability, the fiscal rule of construction favouring the subject was applied. On that interpretation, the firm was not brought within the gift-tax charge, and the deemed gift was deleted in favour of the assessee.

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Issues: Whether the firm was liable to gift-tax on the transfer of flats to retiring partners and the resulting deemed gift under the Gift-tax Act, 1958.

Analysis: The dispute turned on the scope of the expression "person" in section 2(xviii) of the Gift-tax Act, 1958. The definition was treated as not exhaustive, but there was conflicting judicial opinion on whether a firm could be assessed as a separate entity under the Act. In the presence of such doubt, the rule of construction applicable to fiscal statutes required adoption of the interpretation favourable to the subject. Following the Calcutta view, the firm was not treated as falling within the charge of gift-tax.

Conclusion: The firm was not liable to gift-tax on the impugned transfer, and the deletion of the deemed gift was upheld in favour of the assessee.

Final Conclusion: The Revenue's challenge failed, and the assessment of gift-tax on the firm was not sustained.

Ratio Decidendi: Where the charge under a fiscal statute depends on an ambiguous definition and two reasonable interpretations are available, the construction beneficial to the assessee must be preferred; a firm was not treated as assessable to gift-tax on that footing.

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