Contemplation of death in gift law: jewellery transfer by a seriously ill donor was held exempt from gift-tax.

A gift of jewellery was treated as made in contemplation of death where the donor was around 90 years old, seriously ill, and died within a week of the transfer. The court noted that a gift falls within that category when an ill donor expects death shortly from the same illness and transfers movable property to take effect on death. Medical evidence supported the finding that the donor's condition had worsened and that death was likely soon. On those facts, the statutory requirement was satisfied, and the gift was held exempt from gift-tax.

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Issues: Whether the gift of jewellery made by the donor was a gift in contemplation of death and therefore exempt under section 5(1)(xi) of the Gift-tax Act.

Analysis: A gift is made in contemplation of death where the donor, being ill, expects to die shortly of that illness and delivers movable property as a gift to take effect on death. The donor was about 90 years old, was suffering from serious illness, and died within a week of the gift. The medical evidence supported the finding that her condition had worsened and that her death was likely within a short time. On these facts, the statutory ingredient of contemplation of death was satisfied, and the Tribunal's finding was supported by material on record.

Conclusion: The gift was made in contemplation of death and was exempt from gift-tax. The question was answered in favour of the assessee and against the Revenue.

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