Gift-tax liability depends on donor ownership, not joint execution of one gift deed by separate owners.

The Gift-tax Act fastens liability on the donor in respect of the taxable gift, and an association of individuals requires a common purpose or common action in relation to the transferred property. Where two separate owners execute one deed of gift in favour of the same donee, the joint form of execution does not by itself create an association of individuals for tax purposes. Tax incidence depends on the person who makes the gift of property belonging to him, not on the number of documents or the conveyancing form. On that reasoning, the donors could not be assessed as an association of individuals.

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Issues: Whether two persons who owned distinct properties and executed one deed of gift in favour of the same donee could be assessed as an association of individuals under the Gift-tax Act.

Analysis: The charging scheme of the Gift-tax Act fastens liability on the donor in respect of the value of the taxable gift. The concept of an association of individuals requires persons to be associated in a common purpose or common action with reference to the property transferred. The Act also treats an association of persons as an existing taxable entity, and the liability to gift-tax attaches to the person who makes the gift of the property that belongs to him. Where co-owners or separate owners execute one document of gift in respect of properties separately belonging to them, the mere joint execution of the deed does not create an association of individuals for tax purposes. The number of documents or the form of conveyance cannot control the incidence of tax under the Act.

Conclusion: The assessees could not be assessed as an association of individuals, and the answer to the third question was against the Revenue.

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