Unilateral surrender of life interest is not a taxable gift unless it meets the statutory definition or is shown to be non-bona fide.

A unilateral relinquishment of life interest was not a taxable gift because the statutory definition required a voluntary transfer between at least two persons without consideration. The deeming rule for release or surrender applied only where the Revenue established that the transaction was not bona fide, and no such finding was recorded. The surrender was treated as accelerating the beneficiaries' interest rather than effecting a taxable transfer, so no gift-tax liability arose.

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Issues: Whether the assessee's relinquishment of her life interest in the property constituted a taxable gift or deemed gift under the Gift-tax Act.

Analysis: The relinquishment was found to be a unilateral act and, on the governing definition of gift, a taxable gift requires a transfer between at least two persons made voluntarily and without consideration. The deeming provision for release or surrender applies only where the Revenue establishes that the transaction was not bona fide. The record did not show any positive finding that the surrender was not bona fide. The transaction was treated as one resulting in acceleration of the beneficiaries' interest rather than a taxable transfer.

Conclusion: The relinquishment did not amount to a gift or deemed gift chargeable to gift-tax and the issue was decided in favour of the assessee.

Ratio Decidendi: A unilateral surrender or release of interest is not taxable as a gift unless it satisfies the statutory definition of gift or is shown by the Revenue to be a non-bona fide deemed gift within the specific deeming provision.

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