K.S. Puttaswamy, J.—In this reference made under section 26(1) of the Gift-tax Act, 1958 (Central Act 18 of 1958) (the Act), the Income Tax Appellate Tribunal, Bangalore Bench, Bangalore (Tribunal), at the instance of the Revenue, has referred the following question of law for the opinion of this court :

"Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in holding that the gift-tax payable, which was agreed to be paid by the donee, has to be deducted, as a consideration within the meaning of section 4(1)(a) of the Gift-tax Act, 1958 ?" In order to appreciate the question referred to us, it is necessary to notice the facts that are not in dispute.

2. Under a deed of settlement dated March 31, 1973 (annexure-A), the assessee settled her half share in a valuable immovable property, a hotel complex known as "Tourist Hotel" bearing Door Nos. 21, 21/1, 21/2 and 21/3, situated on Race Course Road, Bangalore-9, in favour of one Venkatesha Madi of Bangalore, her foster son, with a condition that he shall pay a sum of Rs. 25,000 to one Smt. R. Ahalya and the gift-tax payable by her under the Act and the same was accepted by him with tho