Gift-tax valuation: liability attached to gifted property was deductible from gift value under the open market test.

Gift-tax valuation must reflect a burden attached to the gifted property, not merely the nominal transfer. Where registered gift deeds required each donee to pay Rs. 20,000 and that condition was embedded in both the recital and operative part, the transfer was treated as an onerous gift or as property subject to an annexed obligation. Because such liability would affect the price the property would fetch in the open market under section 6 of the Gift-tax Act, the amount payable by the donees was deductible from the total value of the gifts and could not be ignored as a purely personal undertaking.

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Issues: Whether the sum of Rs. 60,000 payable by the donees under the gift deeds was deductible from the total value of the gifts for gift-tax purposes.

Analysis: The gifts were made subject to payment of Rs. 20,000 by each donee, and the condition appeared both in the recital and in the operative part of the registered deeds. The transfer was not a bare unconditional gift, but one carrying a burden capable of being viewed either as an onerous gift or as an obligation annexed to the property. Such a burden would affect the price the property would fetch in the open market under section 6 of the Gift-tax Act, 1958. The liability was therefore relevant to valuation and could not be ignored as a merely personal undertaking detached from the gifted property.

Conclusion: The sum of Rs. 60,000 was deductible from the total value of the gifts, and the reference was answered against the Revenue.

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