Sabyasachi Mukharji, J.
1. The assessee is an individual. By three deeds of gifts dated 18th April, 1960, the assessee Biswariath Paul, gifted to his three sons Sankar Nath Paul, Ambar Nath Paul and Dipendra Nath Paul, certain movable and immovable properties as described in the schedules attached to the said respective deeds of gifts. The said deeds of gifts have been made annexures to the statement of case in this case. Each deed of gift contained the following recitals:
'Whereas the grantor has decided to grant and to make a gift to the donee of the properties described in Schedule A hereunder absolutely in severalty for ever subject to /payment by the donee of a sum of rupees twenty thousand only to the said grantor such payment to be made within two years from the date of the execution of these presents and also of the property described in Schedule B hereunder absolutely and also of an undivided equal fourth part of share of the property mentioned in Schedule C absolutely AND WHEREAS the donee has agreed to accept the said gift and to pay the said sum of rupees twenty thousand recited above.'
2. For the purpose of assessment to gift-tax, the properties gifted were valued at Rs. 4,54,700. This reference arises out of assessment for the assessment year 1960-61; for which the previous year started on 10th May, 1959, and ended on 27th April, 1960. The assessee contended before the Gift-tax Officer that an amount of Rs. 60,000, being the aggregate of the three sums of Rs. 20,000 each to be paid by the donees on the aforesaid deeds of gifts, should be deducted in determining the total value of the gift under Section 6 of the Gift-tax Act. The Gift-tax Officer rejected this contention on the ground that the payment of Rs. 60,000 could not be attributed to the gift.
3. On appeal, the Appellate Assistant Commissioner held that the liability to pay a sum of Rs. 20,000 by each of the donees was only a personal liability of the donees without any incumbrance being specially attached to the property. Accordingly, the Appellate Assistant Commissioner held that such personal liability of the donee was not going to affect the market value of the property gifted, and as such the reduction of the value of the gifted property as claimed by the assessee could not be granted. He, therefore, upheld the order of the Gift-tax Officer.
4. There was a further appeal to the Tribunal, where it was contended on behalf of the assessee that the gifts were onerous gifts and having been accepted by the donees the gifts are void to the extent of the burden. Alternatively, it was contended that, as the payment of Rs. 20,000 has been made a charge on some of the properties in each of the gifts, that amount should be deducted from the total value of each of these gifts. The Tribunal was of the view that whether it was a charge on the Schedule A properties or an onerous burden attached to the gift, the amount of Rs. 20,000 was to be deducted from the value of the properties comprised in each of these gifts. In those circumstances, the Tribunal directed that the sum of Rs. 60,000 be deducted from the total valuation of the property valued at Rs. 4,54,700 and reduced it to Rs. 3,94,700.
5. On an application being made, the Tribunal has referred to this court under Section 26(1) of the Gift-tax Act, 1958, the following question:
'Whether, on the facts and circumstances of the case, the sum of Rs. 60,000 was deductible out of the total value of the gifts ?'
6. Section 3 of the Gift-tax Act provides that, subject to the other provisions contained in the Act, there shall, be charged for every financial year, commencing from 1st April, 1958, a tax in respect of gifts made by any person during the previous year other than gifts made before the 1st April, 1957, at the rate or rates specified in the Schedule to the said Act.... Section 6 of the said Act provides that the value of any property other than cash transferred by way of gift shall be estimated to be the price which, in the opinion of the Gift-tax Officer, it would fetch, if sold in the open market on the date on which the gift was made. This is, however, subject to the provisions of Sub-sections (2) and (3) of the said section which are not material for our present purpose.
7. It is, therefore, necessary in this case to examine whether the provision for payment of Rs. 20,000 by each of the donees affects the market value of the property gifted. Mr. B. L. Pal, the learned counsel appearing for the revenue, contended before us that, reading these deeds of gifts as a whole, they indicate that only personal liability was being imposed on the donees who were the sons of the donor. According to him the operative part made it clear that there was no resulting trust in favour of the grantor. It was, according to him, a condition subsequent without any defeasance clause attached to the gift. Therefore, he contended, that it cannot in any way affect the value of the property gifted away and as such the question of deduction of the sum of Rs. 60,000 from the total valuation does not arise. Dr. D. Pal, learned advocate appearing for the assessee, on the other hand, contended that in construing these deeds it has to be borne in mind that two different items of property were being given to each of the three donees, but it was only in respect of one of the items of property that the, recital stated that the gift was being made subject to payment by the donee of the sum of Rs. 20,000, the recital states that whereas the grantor is seized and possessed of, considerable properties and he is unable to manage and control his said properties on account of his growing ill health ... andmake a gift to the donee of the Schedule A property subject to payment by the donee of a sum of Rs. 20,000' and 'whereas the donee has agreed to accept the said gift and to pay the said sum of Rs. 20,000,' the deed goes on to say, in its operative part, that out of natural love and affection, the said gift is being made. It also provides that the same is subject to the payment of Rs. 20,000 by the donee.
8. The main point for consideration in this case is what is the meaning of the expression 'subject to' and how does it affect the valuation of the property. It has been observed in Halsbury's Laws of England, third edition, volume 18, page 389 :
'Gifts may be made subject to conditions either precedent or subsequent. A condition precedent is one to be performed before the gift takes effect. A condition subsequent is one to be performed after the gift has taken effect, and, if the condition is unfulfilled, will put an end to the gift; but, if a condition subsequent is void, the gift remains good. If the words of the condition are capable of being construed either as a condition precedent or as a condition subsequent but the words of the written instrument point to the inference that the donors intended the condition to be subsequent rather than precedent, the court will hold the condition to be subsequent.'
9. In this case, in the relevant assessment order, the fact that the gift has taken place has not been disputed. So, we proceed on the admitted position that on the 18th April, 1960, a gift, in fact, has taken place. So it is not really necessary to consider whether this was a condition precedent or a condition subsequent. But the question is what is the value of the gift It is true that there is no defeasance clause. It is also true that by the express terms of the gift it has excluded creation of a trust in favour of the grantor. But it has to be borne in mind that the gifts have been made subject to the payment of Rs. 20,000 as stated both in the recital clause as well as in the operative portion. It has further to be borne in mind that there are other properties gifted by the same donor to the same donee by the same instrument which are not subject to the said payment of Rs. 20,000. We must also bear in mind that in the recital portion it has been stated that the donee had agreed to accept the gift subject to this condition. Section 40 of the Transfer of Property Act provides, inter alia, as follows :
'Where a third person is entitled to the benefit of an obligation arising out of contract, and annexed to the ownership of immovable property, but not amounting to an interest therein or easement thereon, such right or obligation may be enforced against a transferee with notice thereof or a gratuitous transferee of the property affected thereby, but not against transferee for consideration and without notice of the right or obligation nor against such property in his hands.'
10. This is a registered document. In that view of the matter and reading the document as a whole, it seems to us that the document is capable of being construed either as onerous gift liable to be defeated by non-payment by the donee of Rs. 20,000 or as an obligation arising out of contract annexed to the ownership of this property. Viewed in either way, this will certainly affect the market value of the property gifted.
11. In that view of the matter, we are of opinion that the Tribunal was right in arriving at the conclusion against the revenue. In the premises the question is answered in the affirmative. Commissioner to pay costs of this reference.
12. I agree.