Gift-tax computation depends on the assessment-year rate, not the date each gift was made, under the charging provision.

Gift-tax on gifts made in the previous year was to be computed at the rates in force on the first day of the relevant assessment year, because the charging provision fastened liability for that assessment year rather than on the date of each gift. The Court treated authorities on wealth-tax liability crystallising on a valuation date as inapplicable, since they did not concern tax computation. It also noted that the provision dealing with rebate for prompt deposit did not govern the rate applicable for final assessment. Accordingly, the assessment was upheld on the basis of the assessment-year rate.

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Issues: Whether gift-tax on gifts made during the previous year was to be computed at the rates in force on the date of gift or at the rates in force on the first day of the relevant assessment year.

Analysis: The charging provision made gift-tax payable for every assessment year in respect of gifts made in the previous year at the rates specified in the Schedule. The Court held that the relevant point for computation was the commencement of the assessment year and not the date on which the gift was made. The decisions under the Wealth-tax Act dealing with crystallisation of liability on the valuation date were held to be inapplicable because they did not concern computation of tax. Section 18 was treated as relating only to rebate for prompt deposit and not to final tax computation.

Conclusion: Gift-tax was rightly computed at the rates in force on the first day of the assessment year, and the challenge to the assessment failed.

Ratio Decidendi: Where the charging provision levies tax for the assessment year in respect of transactions in the previous year, the applicable rate is the rate in force on the first day of the assessment year, unless the statute provides otherwise.

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