Privy Purse source of gift accepted as Tribunal failed to consider existing evidence and exemption was allowed.

A gift was treated as having been made out of Privy Purse on the basis of the record already before the authorities, including the bank account and the details of cash and cheque gifts. The HC held that the Tribunal erred by refusing to consider the existing material merely because no fresh evidence had been produced, even though the Commissioner's order already contained a factual finding supporting the Privy Purse source. That failure to examine the available evidence was held perverse, and the referred question was answered in favour of the assessee, supporting exemption under section 5(1)(xvi) of the Gift Tax Act, 1958.

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Issues: Whether the gift amount of Rs. 10,00,000 was made out of Privy Purse and, if so, whether the assessee was entitled to exemption under section 5(1)(xvi) of the Gift Tax Act, 1958.

Analysis: The matter turned on whether the material already on record before the Commissioner of Gift Tax, including the bank account and the recorded details of cash and cheque gifts, established that the gifts were sourced from Privy Purse. The Tribunal declined to return a finding on the ground that fresh material had not been produced before it. The Court held that the Tribunal had the relevant record before it and ought to have appreciated the existing material instead of disregarding the finding already supported by the Commissioner's order. The Tribunal's approach was found to be perverse because it failed to consider the available evidence and the earlier factual determination.

Conclusion: The gift amount of Rs. 10,00,000 was held to have been made out of Privy Purse, and the answer to the referred question was returned in favour of the assessee.

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