Promise to marry is not money's worth: share transfer under a pre-nuptial settlement was treated as a taxable gift.

A transfer of shares under a pre-nuptial settlement was treated as a gift under section 2(xii) of the Gift-tax Act because the stated consideration was a promise to marry, which is not consideration in money or money's worth. Although a promise to marry can support a contract, it does not provide measurable monetary consideration for gift-tax purposes. The settlement therefore fell within the statutory concept of a voluntary transfer without adequate consideration, and the transfer remained liable to gift-tax.

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Issues: Whether the transfer of shares made in consideration of a promise to marry under a pre-nuptial settlement was a gift within the meaning of section 2(xii) of the Gift-tax Act, 1958.

Analysis: The settlement recited that the shares were transferred in consideration of the transferee agreeing to become the assessee's life companion and to marry him. The expression "gift" under section 2(xii) covers a voluntary transfer made without consideration in money or money's worth. A promise to marry may be good consideration for a contract, but it is not adequate consideration for the purpose of the gift-tax law because its value cannot be measured in money or money's worth. The marriage settlement was therefore outside the category of consideration that would exclude the transfer from gift-tax.

Conclusion: The transfer of shares was a gift within section 2(xii) and was liable to gift-tax.

Final Conclusion: The assessee's challenge failed, and the tax treatment of the transfer as a gift was sustained.

Ratio Decidendi: A transfer made in consideration of marriage under a pre-nuptial settlement is a taxable gift where the consideration is not measurable in money or money's worth.

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