Wealth-tax treatment of deposits defeated gift-tax characterisation where the same funds were accepted as the assessee's own assets.

Deposits standing in the wife's name were consistently treated by the assessee as his own assets and were included in his net wealth in wealth-tax proceedings. On that factual and legal basis, the same funds could not be recharacterised as completed gifts to the wife for gift-tax purposes without a legally sustainable transfer. The accepted treatment in wealth-tax assessments negatived the inference of a taxable gift. The deposits were therefore not exigible to gift-tax, and the additions were unsustainable.

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Issues: Whether deposits standing in the wife's name, but treated by the assessee as his own wealth in wealth-tax proceedings, constituted gifts liable to gift-tax.

Analysis: The deposits were consistently shown by the assessee as his own assets though standing in his wife's name. They were included in the assessee's net wealth and accepted as such in wealth-tax proceedings. In these circumstances, the same amounts could not be treated by the gift-tax authorities as completed gifts to the wife. The legal character of the deposits, as accepted in the wealth-tax assessments, negatived the inference of a taxable gift.

Conclusion: The deposits were not exigible to gift-tax as gifts made by the assessee to his wife, and the additions were unsustainable.

Ratio Decidendi: Where the same deposited funds are accepted in wealth-tax proceedings as belonging to the assessee, the revenue cannot, on the same facts, treat them as gifts to the spouse for gift-tax purposes without a legally sustainable basis for a completed transfer.

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