What is a gift in contemplation of death?

A gift made when the donor expects death from a present illness or peril. It is revocable if the donor survives and is similar to a testamentary disposition of movables.

Is such a gift taxable under the Gift Tax Act?

No, Section 5(1)(xi) exempts gifts made in contemplation of death, if legal conditions are satisfied.

How does Mohammedan law view marz-ul-maut gifts?

They qualify as gifts in contemplation of death but are normally limited to one-third of the estate unless the heirs consent to more.

What proof did the Court find persuasive here?

Affidavits of the treating doctor and sub-registrar showed the donor was gravely ill when the deed was executed and died soon after of the same illness.

What was finally decided?

The exemption was upheld; appeal dismissed with costs. The Tribunal was asked to examine if heirs consented where the gift exceeded one-third.

COMMISSIONER OF GIFT TAX v. ABDUL KARIM

Quick Summary

Core point: A gift made when the donor expects death from a present illness (like marz-ul-maut) can be exempt from gift tax under Section 5(1)(xi)—if legal conditions are met.

Here, medical and registration evidence showed the donor was gravely ill when he executed the deed and died soon after. The exemption was upheld; appeal dismissed.

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Issues

What is the test for a valid “gift in contemplation of death” under §5(1)(xi) of the Gift Tax Act?

Do marz-ul-maut (death-illness) gifts under Mohammedan law qualify, and are there one-third limits?

What factual proof is needed to claim the exemption?

Rules

Gift Tax Act, 1958 — §5(1)(xi): Gift “in contemplation of death” is exempt from gift tax.
Indian Succession Act, 1925 — §191: A person may, by such a gift, dispose of movable property that he could dispose of by will.
Mohammedan Law — marz-ul-maut: Recognized as a death-bed gift; generally limited to one-third of estate unless heirs consent to more.

Facts (Timeline)

Timeline of deed, illness, and litigation steps

Donor Abdul Karim, a businessman at Cochin, executed a “settlement will” on 4 April 1964, gifting business movables valued at ₹67,578.

He was seriously ill then and died about six weeks after contracting the illness.

Assessee claimed §5(1)(xi) exemption; the Gift-Tax Officer rejected and taxed the amount.

Assistant Commissioner allowed the exemption, relying on circumstances and subsequent death.

High Court accepted affidavits of the treating doctor and sub-registrar showing grave illness and proximate death; held it was a gift in contemplation of death.

Arguments

Revenue (Appellant)

Deed was inter vivos transfer; not within §191 Succession Act.
Conditions for §5(1)(xi) not proved; exemption should not apply.
Extent and form of transfer questionable for “death-bed gift.”

Assessee (Respondent)

Donor was in imminent peril; deed executed during last illness; he died soon after → meets §191 test.
Marz-ul-maut gifts in Mohammedan law match “contemplation of death.”
Evidence: doctor + sub-registrar affidavits proved the condition and proximity to death.

Judgment

Appeal dismissed with costs. High Court view sustained.
A marz-ul-maut gift can be a gift in contemplation of death within §5(1)(xi) if §191 conditions are satisfied.
Tribunal to examine whether the gift exceeded one-third and whether heirs consented to any excess.

Ratio Decidendi

Death-bed gifts that meet the Succession Act §191 requirements qualify under Gift Tax §5(1)(xi). Under Mohammedan law they are valid, but ordinarily limited to one-third unless heirs consent.

Why It Matters

Sets a clear tax exemption pathway for genuine death-bed gifts.
Aligns tax law with personal law concepts like marz-ul-maut.
Highlights proof needs: imminent peril, proximate death, and proper documentation.

Key Takeaways

§5(1)(xi) exempts gifts made in contemplation of death.
Marz-ul-maut gifts qualify; typically capped at one-third unless heirs consent.
Strong evidence of grave illness and proximate death is crucial.

Mnemonic + 3-Step Hook

Mnemonic: “LAST BREATH, LAST BEQUEST.”

Illness: Was the donor in imminent peril and expecting death?
Movables + Limit: Movable property; within ⅓ cap (or with heirs’ consent).
Proximity: Death followed soon after → claim §5(1)(xi) exemption.

IRAC Outline

Issue	Rule	Application	Conclusion
Is the transfer a valid “gift in contemplation of death” exempt under §5(1)(xi)?	Gift Tax §5(1)(xi); Succession Act §191; marz-ul-maut one-third limit unless heirs consent.	Donor gravely ill at execution; died soon after; evidence from doctor and sub-registrar supports the conditions.	Yes, exemption upheld; appeal dismissed. Tribunal to check ⅓ limit and heirs’ consent.

Glossary

Gift in Contemplation of Death: A gift made when the donor expects death from a present illness/peril; akin to a will for movables.
Marz-ul-maut: Death-bed illness in Mohammedan law; gifts then are valid but usually limited to one-third unless heirs consent.
Heirs’ Consent: Agreement by heirs allowing gifts beyond one-third to take effect after death.