Judgment :- Arijit Pasayat, C.J. Pursuant to the direction given by this Court on an application under S.26(3) of the Gift tax Act, 1958, (in short 'the Act') the following questions have been referred by the Income Tax Appellate Tribunal, Cochin Bench, thereinafter referred to as the Tribunal) for opinion. " Whether, on the facts and circumstances of the case the Appellate Tribunal was justified in holding that the appellant is liable to gift tax for the amount of Rs. 1,25,000/-? 2. Whether, the Appellate Tribunal was justified in not adjudicating on the question of the applicability of S.4(1)(a) and S.4(1)(c) of the Gift Tax Act to the facts of the instant case? 3. Whether on the facts and in the circumstances of the case the Appellate Tribunal erred in not considering the question as to whether the assessee was entitled for exemption under S.5(lXxiv) of the Gift Tax Act"? 2. Facts as presented by the parties are essentially as follows: M.A. Ismail thereinafter referred to as the assessee ) along with his brother Dr. Abdulla, was carrying on business on a particular basis as exhibitors of cinematographic films, under the name and style of 'Zeenath Theatre' since 1965. For that purpose the firm occupied a portion of the land belonging to their father and constructed a theatre, and equipped it with projector and other necessary equipment's. Subsequently in the year 1969 their father gifted the entire property to the assessee and his brother. Value of the entire property of 68 cents of land was shown in the document at Rs. 60,000/- Dr. Abdulla expired and thereafter his wife and minor children were admitted to the partnership. Subsequently, the property was partitioned among the assessee and legal heirs of Dr. Abdulla. Assessee was allotted 38 cents of land, on which the theatre already constructed by the firm stood. Assessee transferred the said 38 cents of land to the firm showing its value at Rs. 75,000/-on such transfer of land tax was levied on the ground that there was an element of capital gain, and a sum of Rs. 15,938/- was subjected to Capital Gains Tax. The Appellate Assistant Commissioner set aside the assessment so far as levy of Capital Gains. In the meantime, the Gift Tax Officer initiated proceedings on the ground that there was an element of gift. 15,938/- was subjected to Capital Gains Tax. The Appellate Assistant Commissioner set aside the assessment so far as levy of Capital Gains. In the meantime, the Gift Tax Officer initiated proceedings on the ground that there was an element of gift. In response to the notice, the assessee filed a 'nil' return of gift Subsequently the partnership was dissolved on 15.4.1981. At that time all the assets and liabilities were valued. So far as the value of the land and building thereon is concerned, it was stated at Rs 7,75,000/-. Value of the land on which the super structure was built, was agreed upon at Rs. 3,00,000/-. After deducting Rs. 75,000/- towards the assessee's share in the property, and allowing exemption under S.5(2) of the Act, the taxable gift was arrived at Rs. 2,20,000/-, and tax was levied. 3. The matter was carried in appeal before the Commissioner of Gift Tax (Appeals) thereinafter referred to as the Appellate authority), who, by his order dated 13.2.1989 upheld the assessment. A second appeal was preferred before the Tribunal, which also did not give any relief to the assessee. Application filed under S.26(1) was also rejected. Assessee moved this Court under S.26(3) of the Act for its opinion on the questions referred to above. 4. Mr. P. Balachandran, learned counsel appearing for the assessee submitted that approach of the authorities below is erroneous, in as much as at no point of time the difference was taken to be a gift In any event, the value at the time of transfer and at a subsequent point of time, cannot always be the same. Learned counsel for the revenue stated that the difference of amount was clearly taxable as the real value had not been reflected. 5. Learned counsel for the revenue stated that the difference of amount was clearly taxable as the real value had not been reflected. 5. At this juncture S.2(xxiv) of the Act defining "transfer of property" is relevant, which reads as follows: "(xxiv) "transfer of property" means any disposition, conveyance, assignment, settlement, delivery, payment or other alienation of property and, without limiting the generality of the foregoing, includes a) the creation of a trust in property; b) the grant or creation of any lease, mortgage, charge, easement, licence, power, partnership or interest in property; c) the exercise of a power of appointment (whether general, special or subject to any restriction as to the persons in whose favour the appointment may be made) of property vested in any person, not the owner of the property, to determine its disposition in favour of any person other than the donee of the power; and d) any transaction entered into by any person with intent thereby to diminish directly or indirectly the value of his own property and to increase the value of the property of any other person". Under S.2(xii) of the Act, "Gift" has been defined, which reads as follows: "Gift" means the transfer by one person to another of any existing movable or immovable property made voluntarily and without consideration in money or money's worth, and (includes the transfer or conversion of any property referred to in S.4, deemed to be a gift under that Section". It may be that in a given case the value as on the date of transfer may not be the same as that taken for some other purpose like determining the value of the assets at the time of dissolution. It would depend upon the time gap between the two events. In the instant case, it has been found by the authorities that the value for the purpose of working out the value of the assets came close on heels of the date of transfer. 6. For deciding the question, it is necessary to take note of the question of the Apex Court in Sunil Sidharth Bhai v. C.I.T. (Civil Appeal No. 1841 of 1981) and Karthikeya v. Sarabhai v. C.I.T. (Civil Appeal No. 1777 of 1981), (1985 (156) ITR 509). 6. For deciding the question, it is necessary to take note of the question of the Apex Court in Sunil Sidharth Bhai v. C.I.T. (Civil Appeal No. 1841 of 1981) and Karthikeya v. Sarabhai v. C.I.T. (Civil Appeal No. 1777 of 1981), (1985 (156) ITR 509). It was inter alia observed that: XXX XXX XXX "Where a partner of a firm makes over capital assets which are held by him to a firm as his contribution towards capital, there is a transfer of a capital asset within the terms of S.45 of the Income Tax Act, 1961, because an exclusive interest of the partner in personal assets is reduced, on their entry into the firm, into a share interest." "The credit entry made in the partner's capital account in the books of the partnership firm does not represent the true value of the consideration. It is a notional value only, intended to be taken into account at the time of determining the value of tine partner's share in the net partnership assets on the date of dissolution or in his retirement, a share which will depend upon deduction of the liabilities and prior charges existing on the date of dissolution or retirement. It is not possible to predicate before hand what will be the position in terms of monetary value of a partner's share on that date. At the time when the partner transfers his personal asset to the partnership firm, there can be no reckoning of the liabilities and losses which the firm may suffer in the years to come. All that lies within the work of the future. It is impossible to conceive of evaluating the consideration acquired by the partner when he brings his personal asset into the partnership firm when neither can the date of dissolution or retirement be envisaged nor can there be any ascertainment of liabilities and prior changes which may not have even arisen yet. Therefore, the consideration which a partner acquires on making over his personal asset to the firm as his contribution to its capital cannot fall within the term of S.48. And as that provision is fundamental to the computation machinery incorporated in the scheme relating to the determination of the charge provided in S.45, such a case must be regarded as falling outside the scope of capital gains taxation altogether." 7. And as that provision is fundamental to the computation machinery incorporated in the scheme relating to the determination of the charge provided in S.45, such a case must be regarded as falling outside the scope of capital gains taxation altogether." 7. Every alienation of transfer of property involves a reduction in the value of one's estate and an increase in the value of estate of some other person. Same result may be achieved by means of a transaction which may not involve a transfer or alienation of property in the normal sense, that is, through intermediaries like firms, companies, etc. The result aimed in clause (d) of S.2(xxiv) is already caught in earlier clauses by increase in estate of donee; the introduction of 'intent' only cuts out the scope. The propositions established are: 1. The transaction referred to takes colour from the main clause, each of which deal with one or the other mode of transfer. It must be a transfer of property in some way. 2. The transaction must be with some other person and that it cannot be unilateral act. 3. The required intent must be shown to be existing. The clause is intended to cover transactions entered into with an intent to diminish the value, not of some property which is transferred to another person, but of the donor's own property and to increase the value of the property of another. The heart of the operation of the clause is 'intent'. 'Intent' means the main or substantial object of the transaction. When the statute brings in as a gift a transaction entered into with intent to diminish the value of one's estate and to increase the value of another, what is hit at, by statute, is a transaction which the person entering into intends to have the effect stated in the sub-section. "Intent" can be equated with 'Object' and 'Objective'. The crucial question is how to prove existence of intent and how to decide whether the transaction was or was not entered into with the required intent. The fact that the transaction had the effect described will not by itself be sufficient. It would depend upon the factual background of each case. The essence of the clause is, as indicated above, the diminition in the value of the property of the donor and increase of the value of the property of the donee. The fact that the transaction had the effect described will not by itself be sufficient. It would depend upon the factual background of each case. The essence of the clause is, as indicated above, the diminition in the value of the property of the donor and increase of the value of the property of the donee. The provision does not require that the diminition and increase in value must necessarily be equal or correspond in amount. The purpose seems to rope in artificial devices which are intended to confer a gift on the donee. 8. Applying the principle laid down by the Apex Court in 6XQLO 's case (supra) the inevitable conclusion is that the authorities were justified in holding that the transfer would attract gift tax under S.4 of the Act. The Tribunal also took note of the fact that there were some mitigating factors so far as the assessee is concerned regarding the value and therefore estimated the value at 2,00,000/- instead of Rs. 3,00,000/- as done by the Assessing Officer and the First Appellate Authority. The conclusions arrived at by the Tribunal is perfectly in order. Our answer to the questions referred to are in the affirmative in favour of the revenue and against the assessee. The reference is accordingly disposed of.